[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
SANCTIONS, DIPLOMACY, AND INFORMATION: PRESSURING NORTH KOREA
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 12, 2017
__________
Serial No. 115-91
__________
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida BRAD SHERMAN, California
DANA ROHRABACHER, California GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio ALBIO SIRES, New Jersey
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas KAREN BASS, California
DARRELL E. ISSA, California WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina AMI BERA, California
MO BROOKS, Alabama LOIS FRANKEL, Florida
PAUL COOK, California TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida DINA TITUS, Nevada
ADAM KINZINGER, Illinois NORMA J. TORRES, California
LEE M. ZELDIN, New York BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr., ADRIANO ESPAILLAT, New York
Wisconsin TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
C O N T E N T S
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Page
WITNESSES
Ms. Susan A. Thornton, Acting Assistant Secretary, Bureau of East
Asian and Pacific Affairs, U.S. Department of State............ 5
The Honorable Marshall Billingslea, Assistant Secretary, Office
of Terrorism and Financial Intelligence, U.S. Department of the
Treasury....................................................... 12
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Ms. Susan A. Thornton: Prepared statement........................ 8
The Honorable Marshall Billingslea: Prepared statement........... 15
APPENDIX
Hearing notice................................................... 56
Hearing minutes.................................................. 57
The Honorable Gerald E. Connolly, a Representative in Congress
from the Commonwealth of Virginia: Prepared statement.......... 59
Questions submitted for the record by the Honorable Eliot L.
Engel, a Representative in Congress from the State of New York,
and responses from:
Ms. Susan A. Thornton.......................................... 61
The Honorable Marshall Billingslea............................. 67
Questions submitted for the record by the Honorable Ami Bera, a
Representative in Congress from the State of California, and
responses from:
Ms. Susan A. Thornton.......................................... 72
The Honorable Marshall Billingslea............................. 75
Questions submitted for the record by the Honorable Ann Wagner, a
Representative in Congress from the State of Missouri, and
responses from:
Ms. Susan A. Thornton.......................................... 78
The Honorable Marshall Billingslea............................. 80
Questions submitted for the record by the Honorable Bradley S.
Schneider, a Representative in Congress from the State of
Illinois, and responses from:
Ms. Susan A. Thornton.......................................... 81
The Honorable Marshall Billingslea............................. 82
SANCTIONS, DIPLOMACY, AND INFORMATION: PRESSURING NORTH KOREA
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TUESDAY, SEPTEMBER 12, 2017
House of Representatives,
Committee on Foreign Affairs,
Washington, DC.
The committee met, pursuant to notice, at 10:05 a.m., in
room 2172, Rayburn House Office Building, Hon. Ed Royce
(chairman of the committee) presiding.
Chairman Royce. Before we gavel the hearing in, I would
just like to remind audience members that disruption of
committee proceedings is against the law and will not be
tolerated. Although, wearing themed shirts while seated in the
hearing room is certainly permissible, holding up signs during
the proceedings, that is not permissible. So any disruptions
will result in a suspension of the proceedings until the
Capitol Police can restore order.
With that, I would like to call us to order here for our
hearing this morning, and ask all the members to take their
seats, if you could. On September 3rd, North Korea detonated a
nuclear device that, according to news reports, was stronger
than all of its previous tests combined. This hydrogen bomb
represents the latest advancement in North Korea's long-running
nuclear and intercontinental ballistic missile program, which
now pose an urgent threat to the United States. Moreover, the
apparent speed in which these North Korean advancements have
occurred are challenging the security structure across East
Asia, creating dangerous instability in the region, and that
instability we will likely be dealing with for decades to come.
So today, this committee is going to discuss the tools that
must be deployed and fully utilized to address these threats.
And I believe the response from the United States and our
allies should be supercharged. We need to use every ounce of
leverage. When I had breakfast this morning with Secretary
Tillerson, we laid out these issues. That leverage includes
sanctions, it includes diplomacy, it includes projecting
information into North Korea to put maximum pressure on this
rogue regime. Time is running out.
And let us be clear, sanctions can still have an important
impact. North Korea's advanced weapons programs rely on
foreign-sourced technology. Much of these programs are made
outside the country. North Korea pays an inordinate amount of
money, and it has to have hard currency to do it, to run this
very expensive ICBM program and this nuclear weapons program.
Since it requires hard currency, that is the Achilles heel.
Unfortunately, years have been wasted as sanctions have been
weak, allowing North Korea to access financial resources and
build its nuclear and missile programs. Any sanction that
crimps North Korea's access to technology is urgently needed.
Congress has done its part to ramp up economic pressure. We
passed a North Korea Sanctions bill last February, authored by
myself and Mr. Eliot Engel, our ranking member. In July, we
increased the tools at the administration's disposal, as part
of the big sanctions package that we passed here, including
sanctions on North Korea and Russia and the Iran missile
program. Part of that included targeting North Korean slave
labor exports. Part of it, again, refined some of the focus on
banking. And part of it, also, was focused on exports to ports
around the world from North Korea.
In August, the administration secured a major victory with
the unanimous adoption of U.N. Security Council Resolution
2371, which Ambassador Haley called ``the strongest sanctions
ever imposed in response to a ballistic missile test.'' She is
now hard at work on another resolution.
To be effective, these tools need to be implemented
aggressively. The administration deserves credit for increasing
the pace of designations. And I appreciate Treasury Secretary
Mnuchin's statements that more are coming. But we need to
dramatically ramp up the number of North Korea-related
designations.
These designations do not require Beijing's cooperation. We
can designate Chinese banks and companies unilaterally, giving
them a choice between doing business with North Korea or the
United States. And I would just observe that not doing business
with the United States for many of these companies would risk
bankruptcy for these institutions.
Earlier this year, Treasury sanctioned the Bank of Dandong,
a regional Chinese bank. And that is a good start. But we must
target major Chinese banks doing business with North Korea,
such as China Merchants Bank, and even big state-owned banks,
like the Agricultural Bank of China. They have a significant
presence in the United States. And if they do not stop doing
business with North Korea, they should be sanctioned now.
It is not just China, we should go after banks and
companies in any countries that do business with North Korea
the same way. Just as we pressed China to enforce U.N.
sanctions banning imports of North Korea coal and iron and
seafood, we should press countries to end all trade with North
Korea. This grave nuclear risk demands it.
Sanctions are not the only way to apply pressure on the
regime. We must maintain a united front with our allies. I just
returned from South Korea where people are on edge. We were
there when the missile was launched over Japan. It doesn't
matter if you are talking to government officials there, or the
business community, or the average person on the street; they
all understand the threat. So I am pleased that the THAAD
missile defense system has been fully deployed. I am also
pleased that the administration is strengthening regional
deterrence through additional U.S. armed sales to Japan and
South Korea, which we discussed this morning.
Finally, we need to do much better at getting information
into North Korea so that North Koreans can better understand
the brutality and corruption of the self-serving Kim regime.
And these efforts are already pressuring the regime, creating
some unrest and increasing defections from North Korea. But I
am afraid our efforts here grade poorly. International
broadcasting and fomenting dissent just have not been a
priority, and that is unacceptable in this situation. While we
should take a diplomatic approach to North Korea, the reality
is that this regime will never be at peace with its people, its
neighbors, or us, and now is the time to apply that pressure.
With that said, let me turn to the ranking member of our
committee, Mr. Eliot Engel of New York.
Mr. Engel. Mr. Chairman, thank you for calling this
hearing. You and I have worked together for a long time on the
Korean situation. We had a hearing on this topic to start the
year. This committee works in a bipartisan manner to advance
some of the toughest sanctions ever on North Korea, which are
now U.S. law.
Yesterday the United Nations Security Council unanimously
agreed to Resolution 2375, in response to the Kim regime's
sixth nuclear test. And we are revisiting the threat of North
Korea today so we can hear directly from the administration.
Mr. Chairman, I am grateful for your unwavering leadership
on this issue. To our witnesses, welcome to the for Foreign
Affairs Committee and thank you for your service.
Acting Assistant Secretary Thornton, I have tremendous
confidence in you and our career diplomats, but it is hard to
believe that nearly 8 months into this administration, there is
no nominee for Assistant Secretary for East Asian and Pacific
Affairs. The same goes for Ambassador to South Korea, Under
Secretary for Arms Control and International Security, and a
range of other senior State Department officials. This
administration has said that North Korea is its top foreign
policy priority; but between the President's dangerous and
irresponsible communication on the matter, and the inexplicable
reluctance to get personnel in place, he is, in my opinion,
undercutting his own peaceful pressure strategy.
I view the Kim regime's nuclear program as the single
greatest threat to American national security and to global
security. Right now, we need all hands on deck and focused on
the same objective. We do that here in this committee. But that
objective, of course, also gets to one of the main questions.
While we all share the desire to rid North Korea of nuclear
weapons, some have said that Kim will never give them up
regardless of the pressure.
I have been to North Korea twice, Mr. Chairman, as you
know, and I can tell you and everybody else, that this is not a
regime that looks at the world the way any other government
does. The Kim regime is bent on self-preservation above all
else and is very willing to sacrifice their own people to
achieve that end. That makes them obviously incredibly
dangerous. The military options in the North Korea contingency
are incredibly grim and it is hard to overstate just how
devastating a conflict on the Korean peninsula would be. If
this conflict escalates into a war, we could be measuring the
cost in millions of lives lost.
Time is clearly running out. Once the regime in Pyongyang
possesses nuclear weapons that can strike the United States, it
will immediately raise questions about the reliability of our
security commitments to our alliance partners, Japan and South
Korea. Nuclear capabilities of this kind would likely embolden
the North Koreans to engage in other bad behavior, such as
harassment of our allies and continued proliferation of nuclear
technologies. Some even speculate that the Kim regime might
even seek reunification of the peninsula on its own terms.
So we need a smart strategy, first of all, and then
definitely consistent execution of that strategy, and
obviously, that is no easy task. Administrations of both
parties were unable to put a stop to North Korea's nuclear
program. North Korea detonated its first nuclear weapon in
2006, and a few years later the Bush administration removed
North Korea from the State sponsor of terrorism list as an
inducement to join the Six-Party talks.
Since Kim Jong Un assumed power, bomb and missile tests
have increased in frequency. And this year, since the start of
the Trump administration, we have seen an alarming increase in
the frequency and the significance of tests, and of course, the
detonation a few weeks ago of what appears to be a
thermonuclear device.
So where do we go from here? Personally, I agree with
Secretary of Defense Mattis that we are ``never out of
diplomatic solutions when it comes from North Korea,''
although, I am not sure President Trump shares that view.
Frankly, I am not sure he even knows what his views are on
this. At present, however, Kim Jong Un doesn't seem to be
anywhere close to sitting down for talks of any kind, much less
sincere negotiations.
The first order of business should be to have a moratorium
on testing, to halt the progress of North Korea's nuclear
program. Our objective has long been a denuclearized North
Korea, and we cannot lose sight of that aim. In my view, we
have not exhausted economic pressure through sanctions, and we
need to do all we can to keep pressure up on the Kim regime.
But at the same time we increase pressure, we must also ramp up
coordination with our allies. We must demonstrate that
defensive military measures are at the ready, both to reassure
our allies and to deter the regime from any action that could
lead to deadly escalation.
I am interested in hearing from our witnesses today about
how we are going to pursue those aims. Under ordinary
circumstances, I would say this is a tall order. But I have to
say again, the President's behavior surrounding this crisis is
making the situation even more challenging. Outrageous red
lines like threats of fire and fury, shaming our allies through
tweets, inconsistently from one day to the next about Kim Jong
Un or China or economic partnership with South Korea, picking a
fight with South Korea right at this time, loose talk about
expanding America's nuclear arsenal, and the proliferation of
these devastating weapons. All these actions undermine the
credibility of the Office of the President, and the credibility
of the U.S. Government, effectively undermining U.S.
leadership, and driving a wedge between Washington and our
friends, creating grave uncertainty with China, whose
cooperation we need, and with North Korea, whose leader is, as
we know, single-minded and ruthless.
Our country faces a serious national security challenge,
and we need principled and visionary leadership. We need to be
standing with our allies, acting with integrity, and
reaffirming our commitments. The President needs to lead on the
global stage, pushing China and Russia to enforce sanctions
effectively, and building consent is about a path forward, not
waiting to see who does what next and then reacting with the
first words that come to mind.
So I look forward to hearing from our witnesses about what
American leadership should look like in this crisis, and how we
find the right path forward. I thank you again, Mr. Chairman,
and I yield back.
Chairman Royce. Thank you. This morning we are pleased to
be joined by a distinguished panel. We have with us Ms. Susan
Thornton, Acting Assistant Secretary in the Bureau of East
Asian Affairs at the Department of State. And as a career
member of the foreign service, she has spent the last 20 years
working on U.S. policy in Europe and Asia, focused on the
countries of the former Soviet Union and on East Asia.
Assistant Secretary Marshall Billingslea is the Assistant
Secretary in the Office of Terrorism and Financial Intelligence
at the Department of the Treasury. Mr. Billingslea previously
served as managing director of business intelligence services
for Deloitte, where we focused on illicit finance. So we
welcome both our witnesses to the committee.
Without objection, the witnesses' full, prepared statements
are going to be made part of the record. And all members here
are going to have 5 calendar days to submit any statements or
any additional questions of you, or any extraneous material for
the record. And with that, I would just suggest--and we will
begin with you, Assistant Secretary Thornton. If you could
summarize your remarks, and then we will go to Mr. Billingslea,
and then we will go to questions.
STATEMENT OF MS. SUSAN A. THORNTON, ACTING ASSISTANT SECRETARY,
BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF
STATE
Ms. Thornton. Thank you very much, Mr. Chairman. Chairman
Royce, Ranking Member Engel, members of the committee, thank
you so much for the opportunity to appear before you today to
discuss the ever-increasing challenge that North Korea poses.
The threat posed by North Korea's ballistic missile and nuclear
program is grave.
North Korea's sixth nuclear test on September 3 is an
unacceptable provocation that ignores repeated calls from the
international community for a change in their behavior. It
followed the August 28 ballistic missile launch that overflew
portions of Hokkaido, Japan, and two ICBM launches in July.
These provocations represent a tangible threat to the security
of Japan and South Korea, our allies, and to the entire globe.
We cannot allow such flagrant violations of international law
to continue.
North Korea has also made dramatic threats regarding its
ability to hit Guam and other parts of the United States.
Secretary of Defense Mattis has made clear that we have the
ability to defend ourselves and our allies from any attack, and
that our commitments to our allies remain iron clad. This
administration, though, has developed a clear strategy of
applying international pressure to hold Pyongyang to account.
First, we continue to push for strong U.N. sanctions. Last
night the U.N. Security Council passed another significant set
of international sanctions, the second set of sanctions in the
last 2 months, unanimously adopted by the U.N. Security
Council.
Second, we are using our domestic laws to impose sanctions
on individuals and entities that enable the DPRK's illicit
activities.
Third, we are pressing countries to fully implement the
U.N. Security Council resolutions and sanctions, and to
harmonize their domestic sanctions regimes with those Security
Council designations.
Fourth, we are urging the international community to cease
normal political interactions with the DPRK, and increase its
diplomatic isolation.
And, fifth, we are calling on countries to cut trade ties
with Pyongyang to choke off revenue sources that finance the
regime's weapons programs. Even as we pursue denuclearization
on the Korean peninsula, deterrence, as was mentioned by the
ranking member, is an essential part of our strategy. We have
deployed the THAAD anti-missile system to the Republic of
Korea, and continue to take other measures to prepare ourselves
to respond to any DPRK attack, whether on the United States,
South Korea, or Japan, with overwhelming force.
We have been clear, we are not seeking regime change or
collapse in North Korea, and we do not seek accelerated
reunification, or an excuse to send troops north of the
demilitarized zone. We do seek peaceful denuclearization of the
Korean peninsula, and a North Korea that stops belligerent
actions and is not presenting a threat to the United States or
our allies.
We recognize that the success of this pressure strategy
will depend on cooperation from international partners,
especially China. And we are clear-eyed in viewing China's
growing, if uneven support, for international measures against
the DPRK. China has taken some notable steps on implementing
sanctions, but we would like to see them do more.
We continue to engage with China and Russia to further
pressure the DPRK, but if they do not act, we will use the
tools at our disposal. Just last month, we rolled out new
sanctions targeting Russian and Chinese individuals and
entities that were doing illicit trade with North Korea. So
while there is more work to be done, we do see encouraging
signs of progress on increasing the pressure on the North
Korean regime.
Countries spanning the globe have issued strong statements
against the ICBM test and the most recent nuclear test. We have
seen countries expel sanctions, North Korean officials, prevent
certain individuals from entering their jurisdictions, reduce
the size of North Korean diplomatic missions in their
countries, and cancel or downgrade diplomatic engagements or
exchanges.
Just in the recent days, we have had two announcements by
two countries, Mexico and Egypt, about their efforts to
downgrade relations with North Korea. Countries have halted
visa issuances to North Korean laborers and are phasing out the
use of these workers. South Korea, Japan, and Australia have
implemented unilateral national sanctions against targeted
entities and individuals, and European partners are
collaborating with us on maximizing pressure on the DPRK.
Unfortunately, despite all of this, we have yet to see a
notable change in the DPRK's dangerous behavior or signs that
it is interested in credible talks on denuclearization. We will
continue to step up efforts to sanction individuals and
entitles, enabling the DPRK regime and its weapons programs.
Following the nuclear test, we are pressing hard for a new
Security Council resolution, which, of course, was adopted last
night. And we hope that these new sectoral sanctions, including
textiles, provisions on oil, provisions on shipping, et cetera,
will allow us to increase our pressure.
China and Russia should continue to exert their unique
leverage, of course, on the DPRK. And it should be clear that
we will never accept North Korea as a nuclear state. We will
continue to work within our alliances to develop additional
defense measures to protect the people of the United States,
and also of our allies. And at the same time, we will not lose
sight of the plight of the three remaining U.S. citizens who
have been unjustly detained by North Korea, nor of the regime's
egregious human rights violations.
We will continue to reiterate our willingness to resolve
this issue through diplomacy. And if the DPRK indicates an
interest in serious engagement, we will explore that option,
but with clear eyes about the DPRK's past track record of
violating negotiated agreements.
Thank you, again, for letting me testify today, and I am
looking forward to your questions.
[The prepared statement of Ms. Thornton follows:]
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STATEMENT OF THE HONORABLE MARSHALL BILLINGSLEA, ASSISTANT
SECRETARY, OFFICE OF TERRORISM AND FINANCIAL INTELLIGENCE, U.S.
DEPARTMENT OF THE TREASURY
Mr. Billingslea. Chairman Royce, Ranking Member Engel,
distinguished members of this committee, thank you for the
opportunity to appear before you today to update you on the
measures that the Treasury Department is undertaking in concert
with the Department of State, and the broader administration
efforts to deal with the unacceptable provocations and threats
posed by North Korea.
In order to constrain Kim Jong Un, the international
community has unanimously enacted multiple United Nations
Security Council resolutions. In fact, with each provocation by
North Korea's dictator, the nations of the world have responded
with steadily tightening constraints of sanctions and
embargoes.
Under previous administrations, the United Nations had
already prohibited trade in matters such as arms, luxury goods,
minerals, monuments, and the maintenance of offices and
subsidiaries and bank accounts in North Korea. And while this
had clearly inhibited North Korea's quest for weapons of mass
destruction, it was not enough.
On August 5, our administration worked with the other
permanent members of the U.N. Security Council to pass
Resolution 2371, striking at the core of North Korea's revenue
generation. That resolution, drafted by the United States,
embargoes all importation of North Korean coal, iron, lead, and
seafood now requires nations to cap employment of North Korean
citizens sent abroad as slave labor.
Very importantly, last night, under Ambassador Haley's
leadership, the United States passed, with the U.N. Security
Council, Resolution 2375, which now targets North Korea's few
remaining sources of revenue; very importantly, the export of
textiles. It further restricts North Korea's ability to acquire
revenue from overseas slave labor, and it cuts off about 55
percent of the refined petroleum products that are going into
North Korea, and it bans further joint ventures with that
regime.
These two recent resolutions are central to our efforts to
mobilize the international community, and to deny funds to Kim
Jong Un's weapons programs. The fact, however, is that North
Korea has been living under U.N. sanctions for over a decade.
It has nevertheless made significant strides toward its goal of
building a nuclear-tipped ICBM. As is the case with any
international agreement, the effectiveness of U.N. Security
Council resolutions depends upon implementation and
enforcement.
Kim Jong Un has two key financial vulnerabilities, which we
are targeting in the Treasury Department: First, he needs
revenue to maintain and expand his WMD and ballistic missile
programs; and second, he needs access to the international and
financial system to acquire the hard currency that Chairman
Royce mentioned, to transfer funds, and to pay for goods, both
licit and illicit.
There are only a number of finite ways that North Korea can
raise significant amounts of foreign exchange, and for many
years, coal has been the center of gravity for revenue
generation. By our estimates, prior to the latest U.N. Security
Council resolutions, coal shipments brought in more than $1
billion a year to the regime.
North Korea was making an additional $500 million or so
from iron, lead, and seafood, and the textile ban will deny
them around $800 million that they were generating in previous
years. This is why these resolutions are so important. Again,
effective implementation of this and all of the prior U.N.
Security Council resolutions is essential.
Consistent with this, on August 22, we struck at the heart
of North Korea's illegal coal trade with China. Treasury
designated 16 individuals and entities, including three Chinese
companies that are among the largest importers of North Korean
coal. We estimate that collectively, these companies were
responsible for importing nearly $\1/2\ billion worth of North
Korean coal between 2013 and 2016. In doing this, we sent two
clear messages: The first was to North Korea. We intend to deny
the regime its last remaining sources of revenue unless and
until it reverses course and denuclearizes.
The second message was to China, we are capable of tracking
North Korea's trade in banned goods, such as coal, despite
elaborate evasion schemes, and we will act even if the Chinese
Government will not.
On June 1 of this year, we targeted a different kind of
North Korean revenue, labor. We designated three individuals
and six entities involved in that set of actions, and we also
took actions in March. In total, under this administration, the
Treasury Department is engaged in a full court press on Kim
Jong Un's revenue generation networks, and we have singled out
37 specific entities involving the most lucrative types of
trade.
Mr. Chairman, I want to share with you today another type
of evasion scheme in which North Korea is engaged. As part of
the efforts to acquire revenue, the regime employs deceptive
shipping practices to conceal the true origin of goods.
Pyongyang falsified the identity of vessels to make it harder
for governments to determine if ships docking in their ports
are linked to North Korea. And despite this evasion, we will
expose the individuals and companies that are providing
insurance, maintenance, or other services to North Korean
vessels.
For instance, in June, we designated Dalian Global Unity, a
Chinese company, that apparently was transferring about 700,000
tons of freight annually between China and North Korea. I am
pleased to provide for the committee today, additional
exposures of these duplicitous actions. The intelligence
community has provided to your committee today evidence of how
vessels originate in China, they turn off their transponders as
they move into North Korean waters, they dock at North Korean
ports, and they on-load commodities such as coal. They keep
those transponders off, and then they turn them back on as they
round to the South Korean peninsula, and they head into a
Russian port.
In this particular case, this vessel, MV Bai Mei 8
registered from St. Kitts and Nevis, sat in that Russian port
for a period of time, and then headed back out to water,
ultimately docking back in China with North Korean origin coal.
Sanctions evasion.
Of the second slide, which we will show now, is yet another
example. In this particular example, you have a vessel that
pulled into North Korea, kept its transponder off, in violation
of international maritime law, docked in Russia, offloaded the
North Korean coal. Another vessel, that one was Panamanian,
another vessel from Jamaica, the Jamaican flag, pulled in,
picked up the North Korean coal, and headed straight to China,
again, to circumvent U.N. sanctions.
Mr. Chairman, the other prong of our effort is to close in
on the way North Korea seeks to access the international
financial system. Because of the sanctions regimes we have in
place, it is difficult for North Korean individuals and
entitles to do business in their true names, and so that is why
they maintain representatives abroad who are engaged in all
manner of obfuscation of creation of shell and front
companies--in fact, I dealt with many of these entities when I
served in the private sector--to help conceal North Korea's
overseas footprint.
These individuals are crucial to the North Korean regime
because they have the expertise needed to establish front
companies, open bank accounts, and conduct transactions to move
and launder funds. It is incumbent upon the financial services
industry, both here and abroad, to stay vigilant, and I urge
those who might be implicated in the establishment of shell or
front companies for the DPRK, or anyone who is aware of such
entitles, to come forward with that information now, before
they find themselves swept up in our net.
We are closing in on North Korea's trade representatives.
This year we have already designated several bank and trading
operatives in China, Cuba, Russia, and Vietnam. And we are
closely coordinating with the Department of Justice and others
to target these various North Korean networks that are
transferring funds.
The chairman mentioned our actions with the Bank of
Dandong. We have designated that bank under Section 311 of the
U.S.A. Patriot Act, and found it to be of a primary money
laundering concern, and issued a notice for proposed rule
making.
Again, I recognize that I am over time with the committee,
therefore, I will wrap up my comments. But suffice to say, that
our actions--this was the first Treasury Department action in
over a decade that targeted a non-North Korean bank for
facilitating North Korean financial activity. It demonstrates
our commitment to take action. We look forward to taking action
with the Chinese where possible. And in the event that that is
not possible, we will, nevertheless, move forward to safeguard
the U.S. and international financial system. Thank you,
Chairman.
[The prepared statement of Mr. Billingslea follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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Chairman Royce. Assistant Secretary Billingslea, thank you
very much. Let me make a point in terms of when we have seen
sanctions that were effective. In 2005, we had the sanctions on
Banco Delta Asia. At that point in time, in talking to a senior
defector that worked in their missile program, he indicated
that because we had cut off the hard currency, they had to shut
down their ICBM program.
One of the things he indicated also, or was indicated by
the conversations we had with senior defectors, was that during
that period of time, the ability of the regime, or the dictator
as they called him, to get his hands on hard currency, was
blocked. And the inability of a dictator to be able to pay his
generals--and this was the quote--``is a very bad position for
a dictator to be in.''
In retrospect, we, therefore, say two things happen during
that period of time in terms of the desperation of the
situation within the Kim regime. This was under his father, Kim
Jong Il. We have the ability to replicate that if we have the
will to do what was done in 2005. And in 2005, it was maybe a
dozen banks that were being used. At that time, Treasury found
that North Korea was counterfeiting $100 U.S. bills, and that
gave Treasury the authority to do this until such time as the
Department of State forced them to lift the asset freezes.
But during that time, we had an enormous amount of pressure
being brought to bear. In this particular case--and let me use
your words here--but it is China that is primarily involved in
the support system in terms of, I would estimate, 90 percent of
the hard currency that the regime needs. Now, we have managed
to cut off a lot of that because it is very expensive to run an
ICBM program, or a nuclear weapons program, billions and
billions and billions of dollars. North Korea's money has no
value, so they have to get this foreign currency into the
country in order to pay for it on a month to month basis, in
terms of what they are trying to build out.
You said if China wishes to avoid future measures such as
those imposed on Bank of Dandong, or the various companies
sanctioned for illegal trade practices, then it urgently needs
to take demonstrable public steps to eliminate North Korea's
trade and financial access. That is the point to us here in
Congress. Some of our opinion on this, in terms of Congress, is
affected by the fact that China's biggest banks, even state-
owned banks, still do business with North Korea. That has got
to end completely. We cannot accept half measures on this.
These transactions are what supports the regime's nuclear
program.
And I understand the administration is pressing Beijing to
take action here. I understand that many of these banks have
significant operations in the United States, and that there
would be consequences to our economy. However, U.S. presence is
the very thing that makes our sanctions so powerful. They would
rather do business with us than North Korea in terms of how
consequential that is to these institutions.
So at what point do we designate these major Chinese banks
for doing business with North Korea? We have done our outreach
to Beijing, with limited results. Shouldn't we demonstrate the
seriousness with which we take the North Korean nuclear threat,
while further isolating that regime in North Korea, Kim Jong
Un, from the financial system that he uses to build out his
atomic weapons program?
Mr. Billingslea. Chairman, first, let me say that China and
Russia are to be recognized for supporting the adoption of the
two most recent U.N. Security Council resolutions, which are
significant for the clamp-down that they enable us to place on
Kim Jong Un's revenue. However, we have been very clear that if
China wishes to avoid further measures, such as that which
happened to the Bank of Dandong, we urgently need to see
demonstrable action.
I cannot tell the committee today that we have seen
sufficient evidence of China's willingness to truly shut down
North Korean revenue flows, to expunge North Korean illicit
actors from its banking system, or to expel the various North
Korean middlemen and brokers who are continuing to establish
webs of front companies. We need to see that happen.
Chairman Royce. To both our Assistant Secretaries, let me
say this: Last night we saw the Security Council unanimously
approve its third U.N. sanctions resolution this year on North
Korea. And this latest measure restricts the regime's oil
imports while banning textile exports in joint ventures.
However, the nature of the Security Council means that this was
a compromise to ensure the regime cannot claim this compromise
that came out of this was a victory, which is what they will
try to do. We have got to demonstrate the impact of these new
international sanctions by making certain that this time, no
one is skirting those sanctions.
So what steps will the Departments of State and Treasury
take in the coming days to implement the new Security Council
resolution? And how will these actions that you are about to
take, send this clear message to Kim Jong Un on the reality
that this time, we are going to follow through with enforcement
and give them no space in terms of additional hard currency?
Ms. Thornton. Thank you, Mr. Chairman. It is very clear in
the process of ramping up this peaceful pressure campaign on
the North Korean regime, that one of the key elements is to
keep to global coalition that we have got behind these
sanctions together, and to keep every single country in the
coalition working actively to continue to squeeze on trade, on
labors, on financial transactions, on shipping, et cetera. And
what we have been doing in the Department of State is working
across the board with every one of our diplomatic partners
around the world. The Secretary raises the North Korea issue in
every single one of his meetings with foreign leaders. And we
have seen a great response from countries around the world who
are increasingly outraged over North Korea's provocative
behavior.
So we have really been working hard to close the net. We
have seen diplomatic establishments closed, ambassadors kicked
out, other North Korean representatives kicked out. The
Philippines announced recently they are going to cut complete
trade with North Korea. So we are having an effect on a lot of
the networks that the North Koreans have built around the
world.
I think the sanctions, 2371, last month, and now, 2375,
last night, we are going to be working aggressively to make
sure that we and all of our partners around the world, too, are
working with every country that we can to make sure that every
country has the capacity to track illicit transactions, to go
after violators, and raising consciousness, but, also, giving
them the tools to go after those bad actors, is what we are
focused on.
We are trying to clean up ship registries and give
countries the ability to better track the shipping of ships
that are flagged under their flag, et cetera. So I think we are
still working on implementing these most recent two U.N.
Security Council resolutions. We also have an ongoing, very
close dialogue with the Chinese on what they are doing to track
sanctions, and we share a lot of information with them, but we
will also drive them to shut down networks that we find.
Chairman Royce. Thank you, Assistant Secretary Thornton, my
time has expired. I am going to go to Mr. Engel for his
questions.
Mr. Engel. Thank you, Mr. Chairman. You know, when I was in
North Korea, and this is a while back, but twice, one of the
things that struck me, we had just deposed Saddam Hussein, and
one of the top North Korean officials--it wasn't the leader,
but it was a very high ranking official--said to us, Saddam
Hussein didn't have nuclear weapons, and look where he is now.
From those two trips I took, that is the one thing that rang in
my ears. And now, of course, they are carrying out those
horrific words.
Secretary Thornton, let me ask you, in Europe we have NATO.
Obviously, in Asia, we don't have a treaty group like NATO. So
how do we reassure, in your view, our allies who doubt our
resolve to defend Tokyo or Seoul, because we are afraid of what
might happen in Los Angeles or Guam or any other place? How do
we reassure our allies?
Ms. Thornton. Yes, thank you, Ranking Member. I think we
have been working very, very closely with both South Korea and
Japan, but also with all the other counties in the Asia-Pacific
region on confronting the North Korea challenge. Obviously, we
have a very close and continuing conversation with both Japan
and Korea, not just the State Department, but the Department of
Defense, on managing our alliances. Obviously, we have been
talking to both Japan and Korea, as the chairman mentioned,
about additional defensive needs and capabilities that they may
have, that they want to move ahead on. And so, I think the
reassurance that we have been providing them with, and the
constant close communication with them, and with others in the
region, has been of significant reassurance to them about our
ongoing commitment to defense of our allies.
Mr. Engel. Thank you very much. Secretary Billingslea,
could you identify the top, say, 25 firms that compose North
Koreans illicit network? And if so, would you be willing to
provide that information to this committee in classified form,
if necessary?
Mr. Billingslea. Ranking Member, yes. We would be pleased
to have a classified discussion with you on a number of North
Korean entities that we are actively targeting. However, once
we choose to move with designations and blocking of assets and
so forth, we would want to keep that kind of information very
close hold until we are ready to move so that the money doesn't
flee in advance of our actions.
Mr. Engel. Okay. I think it would be interesting in this
committee for such a gathering, so we will be in touch with
you. We will do it together, the chairman and I.
Let me ask you about these entities. If Beijing and the
other relevant governments haven't taken sufficient action to
close these entities and curb their activities, have we taken
action to designate these entities under U.S. law?
Mr. Billingslea. Yes, sir, we have. We have done a couple
of waves of that under this administration. Our August 22
actions that I referenced were probably the most noteworthy,
and are definitely a signal of things to come.
Mr. Engel. It is my understanding that these entities
operate in China in a small number of the jurisdictions. Have
we informed Beijing of the activities of these entities and
communicated the expectation of the U.S. Government that their
actions be curbed?
Mr. Billingslea. Yes, sir. Both the Department of the
Treasury and the Department of State are in repeated
communications with our counterparts in China, often very
specifically with respect to entities that we believe are
associated with the North Korean regime, and we make very
specific requests for action on these entities.
Mr. Engel. Thank you. Look, this is a problem that goes
back to a number of administrations before this one, and the
President did inherit a complex and intractable foreign policy
in North Korea, but his mixed and inconsistent messaging is
self-inflicted--it is a self-inflicted wound. Again, I don't
see the purpose of arguing with South Korea on trade at a time
when we need to show strong and resolve.
So let me ask you this: I have so many questions to ask, I
never can get them in in a short period of time. But let me go
back to you, Secretary Billingslea, the chairman mentioned
several large Chinese banks in his remarks. China Merchants
Bank was one of them. Have we taken action against them, and if
we haven't, why haven't we?
Mr. Billingslea. So, Congressman, we have taken action
against Bank of Dandong, as was discussed earlier, which we
believe is a money laundering concern associated with North
Korea. And our actions have had a very clear effect on that
bank's operations. That is a signal of our intent to move
forward with expunging from the international financial system
any financial institution which is taking insufficient action
from an anti-money laundering standpoint against North Korea.
We believe that the next most important thing to do here is
to, very specifically, target and expose those individuals who
are the financial facilitators for the North Korean regime who
set up these elaborate front and shell company structures,
which are then used to get the bank accounts to launder the
money. That is a priority focus area for us, and we are driving
very quickly forward on that matter.
Mr. Engel. Thank you. Secretary Thornton, did you want to
add something to----
Ms. Thornton. Yeah. I just wanted to note for the committee
that the Chinese have announced in the last couple of days,
measures against all of their big banks operating, particularly
in northeast China, issuing warnings and prohibitions about
opening accounts for North Korean actors. So they are actually
feeling some pressure on this and making public statements.
Mr. Engel. One quick thing. You both would agree that any
kind of resolution or partial restitution of this crisis has to
go through China, that it is virtually impossible to not
involve China. China, I think we all think is the one country
that can influence North Korean behavior. Do you both agree
with that?
Mr. Billingslea. I do.
Mr. Engel. Okay. Thank you. Thank you, Mr. Chairman.
Chairman Royce. Thank you, Mr. Engel. We go now to Mr.
Chris Smith of New Jersey, whose subcommittee leads our work on
human rights.
Mr. Smith. Thank you very much, Mr. Chairman, for your
leadership, and for putting together this important hearing.
And I do want to thank our distinguished witnesses for
painstakingly working the details of this. It is an extremely
difficult fight, and I want to thank you for what you are doing
every day to make a difference.
I also want to express my deepest respect to Ambassador
Haley and the administration for drafting Resolution 2375. As
you have pointed out, the toughest sanctions ever meted out
against North Korea. My hope is that China and Russia will
comply with the terms and conditions, and you might want to
speak to your expectations about that, because obviously in the
past, it has been lackluster in many ways.
I would also appreciate your thoughts on how you judge the
success or failure of strategic patience, and whether or not
you thought that aided and got us to where we are at now, or
was this inevitable anyway? For many, there is a significant,
and I think a profoundly significant, under-appreciation for
Juche, the dictatorship cult, deification of Kim Il-sung. I
read books about it. I have talked to many of the diaspora and
refugees who speak, and they say: ``You Americans don't get
it.'' The worship of Kim Il-sung is so profound, so deeply
embedded, and it does lead to a fanaticism that rivals ISIS-
like fanaticism about what they would do for their leader, the
great leader, going back, and now the current leader.
Do you think an information surge--there is nothing that
precludes us from broadcasting, despite jamming capabilities
that they might have. Can de-mythify the Kims because the big
lie has certainly been imbedded in the hearts and minds of so
many North Koreans for so long?
Every time I talk to a group of defectors, and I ask them
that question, they explain eloquently about how from the
youngest age right up--and those expressions when one of the
leaders die, and the tears and people throwing themselves on
the ground, it is not fake. It is fanaticism. And when it comes
to the military, that means that that fanaticism will be
carried out with horrific consequences for those that are
defending liberty in South Korea and elsewhere.
Finally, we know that China subsidizes North Korea's bad
behavior. It enables torture of asylum seekers by repatriating
those who escape to China, in direct contravention of the
refugee convention, and provides Kim Jong Un needed currency by
employing thousands of trafficked workers. And I am wondering
if the Department is looking at, with regards to China,
imposing Magnitsky-like sanctions against those who are
complicit in those crimes?
Even the U.N. Commission on Inquiry for North Korea
recommended that sanctions be used to target individuals. We
have got the law. And I hope that is something that is under
active consideration, and hopefully we will hear soon about
individuals being so targeted. Ms. Thornton.
Ms. Thornton. Yeah, thank you very much. I think, you know,
of course, the U.S. State Department has been very concerned
about the egregious human rights situation in North Korea for
decades. We have had a special representative working on these
issues. We have worked very closely with him. I think we have
made some good progress, or at least we have taken a number of
very significant actions in this area, and will continue to do
so.
I think the question of increasing information access
inside North Korea is one that we certainly have looked at and
are working on, and whether we can do more there, I think we
are always looking at whether we can do more and what we can do
more effectively. But I think, from my standpoint, one of the
biggest ways we can get people inside North Korea to question
what the regime is doing is by making it very difficult for
them to pay the military and to provide for their citizens, and
I think that is really what we are very focused on, in addition
to trying to knock down the proliferation networks that are
contributing to the weapons program. So there is a litany of
egregious behavior across the board, and we want to go after
every single aspect of that. But I think looking at cutting off
the economic flows to North Korea is another way of----
Mr. Smith. Of course, that would include the complicity of
Iran with the ballistic missile program in North Korea?
Ms. Thornton. Sorry, I didn't get the connection.
Mr. Smith. The cooperation between the Iranians and
Pyongyang when it comes to ballistic missiles, that was
something that I and others asked when the Iran deal was being
contemplated. And, unfortunately, that was left off the table
in the final agreement, that the concern is that that
cooperation continues today, and I hope that that is something
that is very aggressively being pursued as well.
Ms. Thornton. Yeah. We are certainly looking at that.
Mr. Billingslea. Yes, sir.
Mr. Smith. But you didn't want to speak to Juche?
Mr. Billingslea. Well, first of all, Congressman, your
leadership on human rights matters has been--for quite a long
time. I had a chance to work for you when I was a staffer on
the Senate Foreign Relations Committee back in the 1990s under
Chairman Helms in those days. Again, I appreciate the stand
that you take on these matters.
We are very specifically looking at a number of individuals
in North Korea who are engaged in egregious, outrageous human
rights abuses. This matter of Juche, I think you have
articulated it exactly correctly. However, I am not sure that
the cult personality necessarily extends to all of the elites
right around the dear leader. He very much depends upon this
hard currency revenue, as the chairman noted, to maintain his
opulent lifestyle and the people around him. And so the extent
to which draining his ability to generate hard currency not
only constricts his ability to engage in WMD and missile
programs, but it also presumably increases the fragility of the
regime around him. This is, as we would say, a twofer in our
view.
Chairman Royce. Mr. Brad Sherman of California.
Mr. Sherman. Soon, North Korea will have more nuclear
weapons than they feel is absolutely necessarily to defend
themselves from us. But they will need hard currency. They
might prefer actual cash currency. Iran is having some
constraints on its ability to develop nuclear weapons. Mr.
Secretary, do we have any understanding with China that nonstop
flights between Pyongyang and Tehran will be forced to stop for
fueling, or do we have anything else that would prevent this
obvious economic deal?
Mr. Billingslea. I will defer to the State Department on
the specific discussions on Air Koryo and flights in----
Mr. Sherman. Right.
Mr. Billingslea [continuing]. And from North Korea. I would
also, Congressman, note that, as we move forward on these two
successive----
Mr. Sherman. I am not asking--I have very limited time. Do
we have anything or not?
Ms. Thornton. I know that we have limitations on air
refueling. I know the Chinese have refused to refuel. So there
is pressure on----
Mr. Sherman. No, I am not asking--I am saying, do we have
any understanding with China that there will be nonstop, no
refueling planes going from Tehran to Pyongyang loaded with
currency or coming back with a nuclear weapon?
Ms. Thornton. No, we don't.
Mr. Sherman. We don't. Okay.
Ms. Thornton. A nonstop plane from----
Mr. Sherman. So we have one country that has over $1
billion in Saran wrapped hard currency. And we have another
country that, if the Assistant Secretary's work is done well,
will need $1 billion in currency and will have quite a number
of nuclear weapons that they could sell.
Folks, I have been coming to this room for 20 years, and
not much has changed. We have Ileana smiling down upon us; that
is good. We got some electronics. But for 20 years,
administrations have been coming here and telling me that we
don't have to make any concessions to North Korea, we don't
have to do anything that would make any single American company
upset, and we are going to make the American people safe. And
for 20 years, I have been hearing that over and over again. I
hear that we are going to have unprecedented sanctions, which
means that we found a few more companies to sanction, just as
they have invented a few more companies and created them.
Whether we can list them faster than they can create them, I
don't know. But the fact is that North Korea's real GDP has
grown 50 percent in the last 20 years.
Assistant Secretary, if you were successful with your
sanctions, you might just cause them not to increase their GDP,
which means they still have 50 percent more than they found
necessary to hold on to power back in 1997. But while we
haven't made the American people safer, we have met the
political objectives here in the United States. We don't
threaten China, even a little bit, with country sanctions,
because that would be politically difficult for the United
States to do. We don't adopt reasonable objectives, like a
freeze in the North Korean program, because that would be
politically difficult to do.
What we do is what we have been doing--for 20 years, and
then Chairman Royce has always come up with this or that better
sanction. Sometimes his ideas are listened to; sometimes they
are not. But there is never enough pressure on the North Korean
regime to cause regime-threatening levels. This is a regime
that survived the famines in the 1990s, late 1990s. Now their
GDP is higher than it has been--it has gone up just about every
year. And China is not going to allow us to put regime-
threatening pressure on the North Korean regime. They may, you
know, punish them a little bit for what they are doing and how
they are doing it and how disruptive they are and how headline-
grabbing they are.
But, Mr. Assistant Secretary, do we even have a plan for
threatening China with country sanctions, tariffs on all goods?
Or is it just a matter that, ``Well, your number seven bank
won't be able to do business in the United States, so your
number eight bank and numbers one through five banks will''? If
you were running a retailer, would you think there was the
slightest risk of your supply chain to China because of China's
unwillingness to engage in the kinds of sanctions necessary
just to get a freeze of the nuclear program?
Mr. Billingslea. Congressman, I think you raise a good
point. And the chairman noted that China is central to this
matter. Ninety percent of North Korean----
Mr. Sherman. And we are not doing enough to force them to
change their behavior, which is to punish North Korea a little
bit for being a little bit too flamboyant in their actions but
to make sure that the regime can survive. And this regime won't
even agree to a freeze of their nuclear program unless you have
something relatively, at least halfway, toward regime-
threatening sanctions.
Mr. Billingslea. Yeah, I am not sure I agree with that. We
are----
Mr. Sherman. You think the regime would give up its nuclear
program, even if they said, well, we can survive these
sanctions, but we care so much about our people that we are
going to--we care about our GDP, we might----
Mr. Billingslea. No, I wouldn't speculate on regime thought
processes. What I would focus on is the Chinese as the center
of gravity here. And I think that--in fact, I know that, from a
tempo standpoint and from a pressure standpoint, the pace of
action that we have taken, even on my----
Mr. Sherman. It is unprecedented, just like the last 19
years people have sat in that chair and told me it is
unprecedented. But it has certainly not been enough stop----
Chairman Royce. Will the gentleman yield?
Mr. Sherman. I will yield.
Chairman Royce. I think the gentleman is raising exactly
the bottom-line question here. In other words, we are
deferential here to a point, but it has been a long time since
the 1994 framework agreement with North Korea. It has been a
long, long time of waiting for China to comply with the
sanctions we pass and, frankly, with the sanctions that the
United Nations pass.
As you have just laid out for us with the charts that you
provided, China understands that that coal is coming,
circumventing the sanctions, and being unloaded, just as they
understand that these banks are not complying with the
provisions that have been passed by the Security Council.
I think that Mr. Sherman raises a point. I have only seen
once, in 2005, in response, as I said, to North Korea
counterfeiting our currency--and that power was soon taken away
from the Treasury--that I ever saw anything that cut off hard
currency into the regime. And that was because we didn't give
anyone an option, anywhere. If you were doing business, we were
shutting down those institutions.
So I would just say this is where the discussion needs to
go next if there isn't full compliance with the sanctions that
the U.N has passed, because what is at risk is our national
security. And there is only one way to shut a program down with
a country like North Korea that doesn't have its own revenues.
And I thank the gentleman from California for raising the
point. And I yield back to him.
Mr. Sherman. I will just say that, for 20 years, we have
talked about company sanctions instead of country sanctions.
For 20 years, China has carried out a policy where they smile
at us but they have done enough with North Korea so that their
GDP is 50 percent higher in real terms. That is much better
economic growth than we have achieved. So the sanctions have
not prevented a high level of economic growth. And my guess is
that we will continue the policies that we have in the past,
perhaps at a louder volume.
And I would finally point out that we have to also remember
how small the North Korean economy is, how difficult it is to
squeeze. Yes, we are trying to go after their oil, but they use
about the same amount of oil as 150 gas stations, total, the
whole country. That is less than there are on Ventura
Boulevard. And, of course, they can liquify their coal and use
that in lieu of oil. So it is going to be tough to put this
regime under enough pressure to even get a freeze. And the idea
that we would ever get this regime--and having seen Saddam,
having seen Qadhafi--to actually give up its nuclear weapons.
I yield back.
Chairman Royce. We go to Mr. Dana Rohrabacher of
California, chairman of the Europe, Eurasia, and Emerging
Threats Subcommittee.
Mr. Rohrabacher. Thank you very much, Mr. Chairman. And
thank you and Congressman Engel for providing the leadership on
this committee to be dealing with issues of this magnitude.
Thank you very much for your responsible leadership.
I share my colleague Mr. Sherman's frustration and
skepticism that was just expressed. Let me note, my father was
a Korean war veteran. And I would hope the very last thing that
is on anybody's mind is to try to exercise more influence by
putting more American troops in South Korea. That is not the
path to a solution to this problem. So what are the solutions?
I mean, obviously, we are being told, even from everything you
are saying--in terms of economic sanctions, I agree with Mr.
Sherman. I am very skeptical that any of that is going to have
impact.
I remember being here and sitting a little bit over there
at the time when President Clinton proposed and passed through
this Congress a plan that would give the North Koreans billions
of dollars of American assistance. Of course, we just did that
with Iranians now too, with the same idea, that we are going to
take some bloodthirsty tyrants and we are going to pay them off
by giving them some sort of aid program for their countries.
So what is the solution? First of all, what is the
challenge? Am I mistaken that I have heard quotes from the
official head of the North Korean Government threatening to
rain mass destruction of some kind upon the United States? Has
he actually made threats to in some way kill millions of
Americans with a nuclear attack?
Ms. Thornton. I don't know if he said those specific words,
but there certainly have been a litany of threats, including at
Guam, including videos showing, you know, bombs raining on
American cities. So I think----
Mr. Rohrabacher. Okay. So he has made it clear that he is
willing, as the leader of that country, to murder millions of
Americans with the technology. Let me note, then, that I would
hope, while we do not consider putting U.S. troops in South
Korea as a solution, I would hope that we would be willing to
use force, which is something that nobody seems to want to
mention. And I think this is perhaps the only thing people like
that understand.
And so I would suggest--I won't ask what type of force has
been ruled out. And I am sure the administration has got the
parameters of what type of force they are willing to use. But I
would certainly think that the use of defensive forces--and,
again, thank you, Ronald Reagan, for insisting that we have
antimissile systems available.
I would hope that the next time the North Koreans launch a
rocket, especially one that will traverse over our ally Japan,
I would hope that we shoot it down as a message to the North
Koreans and to other people, like in Japan, who are counting on
us. And unless we demonstrate we are willing to use force,
there is no reason for them to believe we will.
Also, not only an antimissile-defense type of approach, but
I would hope that, if indeed another missile is launched, or
they are preparing for a launch, that we conduct a cyber attack
on North Korea. And, yes, it is a very small economy and a
small country. A cyber attack against that type of threat
should be effective, but it is a use of force without major
loss of life, which is what Ronald Reagan talked about all the
time. We don't want to be put in a position where our
alternative is murdering millions of people who are basically
the victims themselves of a totalitarian regime.
So I won't ask what parameters we have in the use of force,
but let me just note, I don't believe that sanctions alone will
have an impact on tyrants that murder their own family and have
been so abusive and murderous to their own people. And I don't
believe buying them off, as President Clinton tried to do--now
we are stuck with this--down the road from that deal, we now
have this. And those billion of dollars of assistance we gave
North Korea, I would imagine, provided them other money that
they could put into developing their own nuclear weapon system.
So, with that said, good luck to you all. Thank you very
much. And thank you to our leadership in this committee. We are
all Americans in this. Let's hope for the best but prepare for
the worst.
Chairman Royce. Thank you, Mr. Rohrabacher. We now go to
Mr. Gerry Connolly of Virginia.
Mr. Connolly. Thank you, Mr. Chairman. And welcome.
We talk a lot about bipartisanship, and we want bipartisan
on this committee and in our foreign policy. But we don't get
bipartisan when we ignore history or when we whitewash the
statements and actions of the current President with respect to
North Korea.
We have a model that works--of course, a lot of people on
this committee didn't support it--and that is called JCPOA, the
Iran nuclear agreement. They have met the metrics. Recently,
the United Nations certified they are complying. It rolled back
a nuclear program. It involved cooperation not just with our
allies but with our adversaries, Russia and China. And it had
Iran at the table.
To what end is U.S. policy? What I didn't hear from my
friends on the other side of the aisle, including the chairman
in his opening statement, a powerful opening statement--I
support tougher sanctions, always have. But it is one part of a
policy, not the whole policy. As the Iran experience
demonstrated, there has to be some reward for compliance and
cooperation at the end of the day, or you are left with a
policy only of talking loudly and carrying a stick.
We haven't talked about the fact--the ranking member did--
that the President of the United States, in the midst of this
crisis, threatened our ally, the most vulnerable party to North
Korea's actions, South Korea, with abrogation of a free trade
agreement we worked so hard to get. He accused the new South
Korean President of appeasement. He threatened to cut off trade
with any country that trades with North Korea. Well, that list
is 80, including allies like India and Germany, Portugal,
France, Thailand, the Philippines. Are we, in fact, going to
cut off economic relations or trade with 80 nations? It is an
empty threat. He talked about a response by the United States
of fire and fury, but, frankly, the policy looks more like
fecklessness and failure.
Ms. Thornton, is it the policy of the United States
Government to abrogate the free trade agreement with South
Korea? And has anyone at the State Department looked at the
negative consequences of such an action, especially at this
time?
Ms. Thornton. Thank you, Mr. Connolly. Yes, we have looked
very carefully at the Korea free trade agreement, KORUS. We are
currently undergoing a very rigorous review of all the
provisions. The United States Trade Representative recently
held a----
Mr. Connolly. My question--I am sorry. I am limited in
time. Forgive me. My question is direct: Is it the position of
the State Department that abrogating the free trade agreement
with South Korea would be helpful in our diplomatic efforts and
in our efforts to respond to the North Korean threat at this
time?
Ms. Thornton. No. I think what we would like to do is work
to improve the trade agreement at the same time that we work
with the South Koreans, obviously, on facing the North Korean--
--
Mr. Connolly. Is it the policy of the State Department that
the new President, President Moon, of South Korea is engaged in
a policy of appeasement in any respect with respect to the
north?
Ms. Thornton. No. I think we have been working very hard to
get the South Koreans to come around and be on the same page as
we and the rest of our allies. And they have come around very
nicely, I think.
Mr. Connolly. Thank you. Mr. Billingslea, like you, I also
served on the Senate Foreign Relations Committee and worked
with your former boss, Mr. Helms. I was on the other side of
the aisle. But we actually made a lot of music together
sometimes, which always surprised the Reagan administration and
the Bush administration afterwards.
You talked a lot about China. So China has been violating--
and you provided some graphic evidence of that--with impunity,
violating sanctions other flags shipping coal and providing
badly needed foreign exchange for the North Korea regime. They
just signed on in this unanimous U.N. resolution a new round of
sanctions. Do we have any reason to believe that that would
signal a change in Chinese behavior for the better, or is it
another empty promise that will be violated with impunity?
Mr. Billingslea. To be determined.
Mr. Connolly. Can you speak louder into your microphone?
Mr. Billingslea. Sorry, Congressman. It is to be
determined. The reason I wanted to highlight for you the
evasion schemes is that maritime enforcement now becomes
crucial. With the two U.N. Security Council resolutions that
are in effect, not sanctions but embargoes, complete embargoes,
at least on paper, of coal, iron, lead, now textiles, seafood,
gasoline, maritime enforcement of those U.N. Security Council
resolution decisions, which are binding on all members of the
U.N., that is going to be crucial going forward.
Mr. Connolly. And if the chair would just indulge me for
one followup question. So, at the end of the day--and either or
both of you can answer. So let's say, by tightening sanctions,
which I favor, we get North Korea to the table saying
``Uncle,'' what do we give them in return? What are we prepared
to do to entice North Korea, that there is, you know, a pot of
something at the end of the rainbow if you freeze the program
and start to reverse it under international observation?
Ms. Thornton. I think----
Mr. Connolly. Because isn't that the goal?
Ms. Thornton. I will just be quick. I think the Secretary
of State has been pretty clear in public remarks that we would
be willing to look at economic enticements, at development
opportunities for their economy, at their security concerns,
and other things that we have talked about during negotiations
with them in the past. And so I think all of that would be on
the table, assuming we could get to--you know, we don't want to
pay for negotiations or negotiate to get to the negotiating
table. That is where we are right now.
Mr. Connolly. At the end of the day, I will give you one
word that has to guide U.S. foreign policy in all respects but
especially North Korea. That word is ``efficacy,'' which is
defined as the ability to produce a desired and intended
result. And I think that is also to be determined, Mr.
Billingslea.
Thank you, Mr. Chairman, for your indulgence.
Chairman Royce. Thank you very much, Mr. Connolly.
We now go to Mr. Steve Chabot of Ohio.
Mr. Chabot. Thank you, Mr. Chairman. And I want to again
thank you and the ranking member, as others have said, for your
at least attempts to get sanctions worked up. I think it is
something worthwhile to pursue.
That being said, just one thing I wanted to make sure that
I am accurate on this. Ninety percent, perhaps more, of what
North Korea, the regime especially, needs to survive they get
in one source or another from China. Is that--I am seeing
nodding. Ms. Thornton, would you agree with that also? Okay.
That being said, obviously, China is the key, has been a
long time, continues to be. It seems to me there are two things
which could get China's attention. They have given us lip
service for decades now, but one of those things is the trade
with the U.S. is significant, and it seems that if we
literally--I mean, some sanctions on banks, that may help a
little bit, but it is not going to have the result, I think,
that we all want, and that is to avoid military action and get
North Korea to back off this march to madness in their nuclear
program.
So one way is if we actually did cut off trade. And, of
course, if we did that, would it have an adverse impact on the
American economy? Of course it would. However, I would say that
pales in comparison to the impact on the American economy if we
see a thermonuclear device go off in Seattle or San Francisco
or L.A. Or New York or Washington. So that is one thing that I
think could actually get China's attention.
I think the other thing--and, Ms. Thornton, you sort of may
have been at least thinking about this when you said that we
are discussing with Japan and South Korea what they may want to
move ahead on. And I don't know if this is what you had in mind
or not, but it is certainly what I have in mind and have said
this for years: They do not want Japan or South Korea to have
their own nuclear programs. And I have thought for a long time
that we should at least be discussing that with them. And I
think the discussions alone could have gotten their attention,
to get them to put pressure on North Korea to back off. It may
be too late for that now. But could you comment on those two
items which perhaps could get China to actually put sufficient
pressure on North Korea to back away from this madness?
Ms. Thornton. Sure. Well, I mean, we are certainly looking
at every option to put more pressure on China. We are also
using all of our global partners to speak up and also, from
their perspectives, put pressure on China, because we do see
China as the key to the solution of this problem, if we can get
there.
As for cutting off trade, obviously that would be a huge
step, and there are a lot of ramifications of that. I think
going after entities and banks is a way of going more directly
after the North Korean angle here, but I agree with you that,
trade is preferable to seeing any kind of military
confrontation, especially one that would involve people in the
United States.
But on the issue of defenses in Japan and South Korea, we
have certainly been talking to Japan and South Korea about
beefing up their defenses and their ability to, themselves,
take action in the event of an attack. And even those
discussions have gotten China's attention. You probably know
the Chinese have been very vocal about their opposition to the
THAAD deployment in South Korea, which we have moved ahead on
now and gone ahead and deployed over and above their
objections. And we have made clear that the Japanese are
seeking additional defensive systems to enable them to ward off
a direct attack from North Korea. And it is quite clear, I
think, already to the Chinese that this is an area that is
going to be further developed if we can't rein in the threat
from North Korea.
Mr. Chabot. It is my view that, short of one of those two
actions, I think we are going to continue down this path where
Kim Jong-un will continue to move forward on this nuclear
program. And that will leave only the military option, and
there is no good to come from that. We know if we take that
action, they can target Seoul, and literally tens, maybe
hundreds of thousands of lives could be lost, including
American lives. So that is the last resort, although it may
ultimately come to that.
Or the alternative--some people are suggesting now, as
well, we have a nuclear China, we have a nuclear Russia, we
don't like that, so maybe we end up with a nuclear North Korea.
Either one of you, why can we not allow that to happen? How are
they different?
Ms. Thornton. A lot of times, people talk about the North
Koreans needing a nuclear program for their own defense. The
fact of the matter is that there has been basically a mutual
deterrence in effect since the end of the Korean War. They have
a conventional position that allows them to target Seoul. And
so the idea that they need nuclear weapons for their own
defense, when there has never been a retaliation for any of
their provocative, hostile, or even kinetic actions that they
have taken, is a bit of a bridge too far.
So the concern is that they are pursuing a nuclear program
in order to use that program to conduct blackmail and hold
other countries hostage and continue to take even worse sorts
of steps in their behavior. Proliferation is another major
concern, of course. It undermines the entire global
nonproliferation system and would be, we presume, ripe for sale
and proliferation around the world. So I think two major angles
there.
Mr. Chabot. Thank you. My time has expired.
Chairman Royce. Mr. David Cicilline of Rhode Island.
Mr. Cicilline. Thank you, Mr. Chairman. Thank you to our
witnesses for being here.
I start with you, Ms. Thornton. You said, ``We will never
accept North Korea as a nuclear state.'' What did you mean by
that? I mean, aren't they already a nuclear state?
Ms. Thornton. No, we do not recognize them as a nuclear
state. And----
Mr. Cicilline. What does that mean?
Ms. Thornton. We do not recognize them as a nuclear weapons
state. We don't recognize their program, and we won't consider
them to have nuclear weapons. We are pursuing denuclearization.
Mr. Cicilline. Well, we can't imagine it away. Either they
are a nuclear state or they are not. The recognition of one--I
am not understanding that point. I mean, we have to have a
realistic context before we can shape smart----
Chairman Royce. Will the gentleman yield for just a second?
Mr. Cicilline. Sure.
Chairman Royce. Because there is an additional complexity
here.
Mr. Cicilline. About delivery.
Chairman Royce. Exactly.
Mr. Cicilline. Yeah.
Chairman Royce. And I just wanted to make that point.
Mr. Cicilline. No, no, I understand, but--okay. Let me move
on.
Mr. Secretary, you said that U.N. Resolution 2371 prevents
55 percent of refined petroleum products from coming into North
Korea and that new sanctions prevent $\1/2\ billion of coal,
which leaves another $\1/2\ billion of coal and about 45
percent of petroleum products. Am I understanding that our
sanctions don't reach the balance of that? And if not, why not?
Mr. Billingslea. So, Congressman, a couple of things. So
all coal is prohibited to be transacted. That was under the
prior----
Chairman Royce. Mr. Assistant Secretary, just pull the
microphone a little closer.
Mr. Billingslea. Sorry. So, Congressman, it is not allowed
to trade in North Korean coal, period, nor in iron, iron ore,
lead, lead ore. North Korean----
Mr. Cicilline. So those percentages relate to
noncompliance.
Mr. Billingslea. The 55-percent number I gave you is kind
of the fuzzy math done on how much gasoline versus crude oil is
imported today into North Korea from China.
Mr. Cicilline. Okay. Thank you. I think we have heard from
a number of my colleagues in response to those questions about
pretty clear noncompliance by the Chinese. The U.N. experts on
North Korea in February found that they were using this
livelihood exception to trade banned goods and allow companies
to send rocket components to North Korea.
And you said, Ms. Thornton, and I think also Mr. Secretary,
that we need to see that happen--that is, compliance by the
Chinese. You described the Chinese as the center of gravity.
And then, Ms. Thornton, you said, if China doesn't comply with
the sanctions, we will use the tools at our disposal. What are
those tools, and why aren't we already using them?
I mean, otherwise, these sanctions sound good in a press
release, but if they are not actually being honored by the
parties, they are not effective, as Mr. Connolly said. So what
are the tools that you intend to use, and why aren't we already
using them?
Ms. Thornton. Well, one of the things to remember--I think
the Assistant Secretary mentioned this--is that North Korea has
been under sanctions for many decades. So their networks--it is
a criminal enterprise, and their networks are deeply embedded,
and they have designed them to escape detection. So it is a
little bit complicated to go after these things.
But what I meant when I say using our tools, we have these
international sanctions regimes. The international community
has signed up to it and is obliged to enforce that. We have a
running discussion with many of the countries around the world
on information we have about what we find as illicit networks
and ask them to go after those. If they don't, then we will use
our domestic authorities to sanction those entities.
Mr. Cicilline. I guess my question is, I think most
military experts would acknowledge that there is not a good
military option. We can talk about it, but there actually isn't
one. And so, if we surrender the use of the sanctions regime to
produce the result that we want, by not using every tool that
is available to us, aren't we in the end acquiescing to North
Korea's nuclear capabilities?
Ms. Thornton. I think our strategy is to ramp up the
sanctions regime, and that is exactly what we have been doing.
We have had two unanimous U.N. Security Council resolutions in
2 months. That is unprecedented.
Mr. Cicilline. No, no, I understand. But they have to be
implemented in a meaningful way and fully. Otherwise, they are
nice resolutions, but it sends the wrong message----
Ms. Thornton. But that is exactly----
Mr. Cicilline [continuing]. It seems to me, to North Korea
if they don't see that that is real engagement by the Chinese
to make these sanctions work.
Ms. Thornton. Right. But that is exactly what we are
working on. And I think, on sanctions regimes, a lot of people
say the sanctions won't work either. But in past cases where we
have used sanctions, I just want to note, you are a chump if
you are implementing sanctions and they are not working until
you are a genius when they do.
Mr. Cicilline. No, no. I think sanctions do work if they
are implemented. My last question is this. It seems to me that
this suggestion that China is the center of gravity is right
and that the only way that we will get China to fully implement
the sanctions regime is for them to conclude that it is in
their own interest to do that. And that will only happen when
they arrive at the point that their fear of a unified Korean
Peninsula aligned with the United States is outweighed by their
fear of a military conflict on the Korean Peninsula. And I
think that is the calculation.
And I guess my question is, what are the strategies that
the administration is pursuing that bring China to that point
where they conclude that it is in their interest to enforce the
sanctions because the danger of a conflict on the peninsula is
greater than their fear of some alignment by a unified Korean
Peninsula with the United States? Or do you agree or disagree
with that assessment? And I would ask Mr. Secretary and Ms.
Thornton.
Ms. Thornton. I think that that is right. And I think we
have seen the Chinese moving in their system, for them, pretty
swiftly toward a recalculation of what they are worried about
on the Korean Peninsula. They see North Korea's actions
undermining their own security through the beefing up of
defenses in their region. They are certainly very alarmed at
North Korea's behavior. And the explosion of the sixth nuclear
test, the hydrogen bomb, right on their border is very
concerning to them.
So I think we see them moving in this direction. It is not
fast enough or sort of deep enough for us to be satisfied, but
we are certainly pushing them in that direction. And we have an
ongoing conversation with them about this at the highest
levels.
Mr. Billingslea. I would also add that, as the chairman has
pointed out, the Banco Delta Asia sanctions had a crippling
effect on the regime, but that was more than a decade ago. We
have for the first time in more than a decade taken action
against, in this case, a Chinese bank. This was Bank of
Dandong.
That was a very clear warning shot that the Chinese
understood. And we are in repeated discussions with them that
we cannot accept continued access in the international
financial systems by North Koreans through their financial
networks.
Mr. Cicilline. Thank you. And I thank you, Mr. Chairman. I
yield back.
Chairman Royce. Mr. Ted Yoho is chairman of our Asia-
Pacific subcommittee. And he joined us in South Korea and has
passed legislation to improve our ability to get information
actually into North Korea. Mr. Yoho.
Mr. Yoho. Thank you, Mr. Chairman. And I thank you for
holding this hearing today.
North Korea's recent provocations are its most dangerous
yet. In launching a ballistic missile over Japan and detonating
its most powerful nuclear device to date, the Kim regime has
shown it is more emboldened than ever before. Kim Jong-un says
we are backed into a corner. However, I think he is wrong. He
is getting into a decreasing corner by his actions, and we are
on the outside of that corner looking in.
But year after year, successive administrations have failed
to fully implement the sanctions and China continues
underwriting DPRK's programs, either financially via trade,
doing 90 percent of their trade, or through technological
exchanges, as we have seen with the rocket North Korea launched
up and we recovered--or not we, but the South Koreans recovered
the second stage and it was full of Chinese components. So
China is complicit in this.
The implementation of the secondary sanctions authorized by
Congress, as established, that we have done over the past years
is often controversial, but as North Korea's nuclear technology
has advanced, the need has become imminent. With these recent
tests, implementation has been an existential need for millions
of North Koreans, Japanese civilians, perhaps the United
States, and really the world community.
And I find myself agreeing with my colleague Mr. Sherman
again when he was talking about China. We have been here
multiple times, his experience of 20 years in this committee,
hearing the same story over and over again. And my questions
are going to be focused on what do we do from this point
forward.
You two are both in the seat that you are watching this at
a very close level of engagement. You know what is working,
what is not working. How do we go forward so that we are not
back here in a year discussing what we should have done? I want
to know what we did do and what tools you need to move forward
so that these sanctions really do work.
Ranking Member Sherman and I both--we wrote a letter both
to State and to the Treasury providing a list of Chinese banks
that may have provided North Korean banks with indirect
correspondence. And I am happy to say that the State Department
have sanctioned recently--and China has been complicit with
this and gone along with this--the Agricultural Bank of China
and the China Construction Bank. These are great, positive
moves, but there are still 10 more banks that China can
sanction or put pressure on to stop doing business with North
Korea.
And my question to you: Do you guys have enough tools in
your arsenal to make sure that the world community--because it
can't be just us. And that is why sanctions haven't worked in
the past. It has to be a buy-in from the world community,
because this is something that is affecting all of the world
community, to get to a point where we have diplomacy that works
so that we don't have any kinetic conflicts. Certainly, this
world does not want to see a nuclear device go off in a
homeland of anybody's. And this is this generation's fight, to
make sure this doesn't happen. So, Ms. Thornton, is there
anything else that you need that would make these other
countries complicit with the sanctions?
Ms. Thornton. Thank you very much, Mr. Subcommittee
Chairman. We definitely believe that the U.N. Security Council
actions are the most significant actions that we can take on
the sanctions front, and that is because every country in the
world is obligated to enforce those sanctions. It gives them
the legal authority to do so, and it obliges them do so. And it
opens up a whole sphere of enforcement for us to work with
other countries on.
So I think the most significant actions in the U.N., which
U.N. Security Council--our representative, Ambassador Haley,
has undertaken, have been really key. The other key, I think,
authorities are our domestic enforcement authorities, which
back up the U.N. Security Council----
Mr. Yoho. Let me stop you there and ask you this. North
Korea was on the state sponsors of terrorism list. And,
certainly, we can look at their acts that they have done. In
fact, you have said that North Korea was using intimidations,
acts of intimidation--words you used to describe terrorism. So
when we took them off the state sponsors of terrorism list, do
you feel it would be important to put them back on that? And
would it help toughen the sanctions and get compliance by the
other countries?
Ms. Thornton. I think the state sponsors of terrorism list
is another statutory tool that we have, and, certainly, the
Secretary is looking at that in the context of North Korea. I
don't know that there are any----
Mr. Yoho. I am about out of time. Would it be prudent for
us to----
Ms. Thornton. I don't know if there are additional
authorities there that would give us additional tools to go
after things. I think it would be just another layer. But we
are certainly----
Mr. Yoho. Another layer would be good.
Ms. Thornton. Yes.
Mr. Yoho. And I appreciate your time. And I am sorry I
didn't get to you, Assistant Secretary. I yield back. Thank
you, Mr. Chairman.
Chairman Royce. Thank you, Mr. Yoho. We go now to Mr. Brad
Schneider from Illinois, who was also with our delegation for
our meetings with President Moon and other senior U.S. and
South Korean officials during that time when the North Korean
missile was shot over Japan.
Mr. Schneider. Thank you, Mr. Chairman. And, again, thank
you for leading that delegation. It was an extraordinary
opportunity to understand the situation better, to understand
the threat, but also understand the strategy.
Today, we have talked a lot about strategy. We have talked
about North Korea's strategy of accelerating testing, trying to
miniaturize a weapon and put it on a missile. We have talked a
lot about U.S. strategy and working within our laws as well as
the United Nations.
But strategies follow goals. And we have had some
discussion of our goals. If I could summarize our goals, it
seems to be where priority number one is to eliminate the
nuclear threat by North Korea. A secondary goal is to bring
stability to the peninsula.
Ms. Thornton, you talked about what our goals are not. I
just want to emphasize those. Not regime change or collapse;
nor do we seek an accelerated unification of Korea or an excuse
to send troops north of the armistice agreement's Military
Demarcation Line. We have no desire to inflict harm on the
long-suffering North Korean people, who we view as distinct
from the hostile regime in Pyongyang. I think that is
important. What I would like to ask you is if you could
succinctly describe, what are North Korea's goals?
Ms. Thornton. I think it is pretty hard to get inside the
mind of the North Korean leader, but I think he has been fairly
clear in public statements that he seeks to complete his
nuclear weapons program in order to be able to sit down at the
table with us as a sort of nuclear weapons fully developed
state and----
Mr. Schneider. Well, that seems part of the strategy, but
their long-term goals--Mr. Deputy Secretary?
Mr. Billingslea. I really do have to defer to State
Department on this. My job is to drag them to the table through
economic pressure. But I defer to State Department on any----
Mr. Schneider. Okay.
Ms. Thornton. I think that most experts on Korea would say
that the main, overarching goal--and I think one of the members
mentioned the Juche philosophy, Representative Smith. I think
that regime survival, regime perpetuation is pretty much an
overarching purpose and goal.
Mr. Schneider. Okay. I mean, that seems to be the shared,
collective wisdom. How about China? Because they have different
goals, obviously, than ours, in many ways. How would you
describe their goals in this dynamic?
Ms. Thornton. I think China has been also pretty clear in
their public comments that they don't want chaos, war, or nukes
on the Korean Peninsula. Those are their stated three main
goals in this particular issue. Of course, they are also
looking to maintain stability in their region and to create the
conditions for further economic development.
Mr. Schneider. Okay. So it seems that there is this shared
perspective, at least between the U.S. and China, that
achieving each of our respective goals--denuclearization,
elimination of the nuclear threat--we should have--sanctions
are the path to put pressure on Korea.
But how do we create--and this is a broad message, maybe,
beyond here--a clear message for North Korea that the only path
for survival, the only path for them to achieve their goals is
through denuclearization, that they are taking the wrong path?
What off-ramps, what mechanisms can we provide to show them
that the way they are headed is a risk to their regime, a dire
risk to their regime, every option being on the table, and that
there is a different path and that path is open to them?
Ms. Thornton. Well, it is difficult to do this when they
are shooting ICBMs, threatening Guam, and exploding hydrogen
bombs on the border of China. But I think we have been very
clear in our public statements that denuclearization is the
goal. We have used both words and actions to try to drive them
in the direction that we want them to go--public statements by
us, public statements by many of our partners and allies, in
messages directly to the North Korean regime but also through
public messaging, which the North Koreans definitely are
picking up on, to tell them that denuclearization is the only
path to survival for the regime.
And we have been quite explicit about that. We are trying
to show them that through our deterrence actions, through our
sanctions actions, through our diplomatic actions. And I think,
you know, they have a different view so far, but we are
continuing to press on that.
Mr. Schneider. And I don't mean this next question any
other way than the way I am asking it. It really is an honest
question. Is it better to have a very clear, consistent message
that you take these steps, this is what we will do, or is it
better, in your mind, to leave uncertainty and perhaps have a
mix of messages?
Ms. Thornton. Well, I think it is good to have consistent,
clear messages, especially for a regime like North Korea that
has a very opaque communication system and difficulty,
probably, for information to reach the top leader, which is why
we use public messaging in some cases, so that we can be sure
that he can get it directly. But I think it is also important
not to take any options off the table so that there is
sufficient motivation for them to move toward the negotiating
table.
Mr. Schneider. Yeah, I would share that. And I am out of
time. I will ask a question maybe for later, someone else will
touch on. We talked about the outside pressure in trying to get
alignment with the U.S. and China in putting pressure on North
Korea. But I would appreciate the opportunity for further
discussion on how we create that internal pressure from within,
not just making it harder for payment of the military, but for
the public to understand what is really happening within North
Korea and, in contrast, what the opportunities are without and
pursuing that different path. And, with that, I thank you for
the extra time, and I yield back.
Chairman Royce. Would the gentleman yield?
Mr. Schneider. Yes. Please.
Chairman Royce. I think you make a very important point, in
terms of that focus. And there is another element, I thought,
with respect to the conversations we have had. This is the
second time we have talked to a senior North Korean defector
who said, no, they already have the ability, they are not
afraid of a South Korean attack or a North Korean attack
because they have a million-man army on the border and the
100,000-plus missiles and all the other hardware.
What the issue is for North Korea is that they feel it is
an illegitimate government in South Korea; that the founding of
the Korean Peninsula, when the occupation was over from Japan,
it should have been unified under the Kim dynasty. And the
focus of the Kim regime, of Kim Jong-un, is on getting enough
nuclear weapons, hydrogen bombs, that they can turn to Seoul
and say, we are going to be reunified, but we are going to be
doing it under the regime.
I think that is interesting information in that it comes
from those who in one case was the head of propaganda for the
regime. And if that is indeed the calculus, it really
complicates things in terms of the feelings of the Kim regime.
Both seemed to indicate that, although that was the focus of
the Kim family, it may not necessarily be the focus of most
North Koreans, who tend to understand that that drive to do
that is what is costing the country its standard of living, its
ability to give anyone else opportunity. It is solely in the
interest of the megalomaniac who is currently in power.
I think that concept is an interesting one when it is
shared with us by those who were actually part of the North
Korean regime. But I do think we need to begin the process to
having hearings to dig deeper into this whole calculus.
Mr. Schneider. And if I can, I think that is critically
important. I couldn't agree more. And this is why I was talking
about goals. If the goal is regime survival, that strategy,
there is an opportunity to have--one direction. If the goal is
the submission of South Korea, that is a different--the
strategy can be the same with the development of nuclear
weapons, but trying to create an opportunity for engagement is
entirely different and much more challenging. So I think that
is a critical conversation to have. Thank you.
Chairman Royce. Yes, indeed. Mr. Adam Kinzinger of
Illinois.
Mr. Kinzinger. Thank you, Mr. Chairman. I just want to
thank all of you for being here. And, personally, I want to
commend the President, frankly, for finally taking a tough
perspective on North Korea; I think, being very open about this
is the challenge of our generation. We all know terrorism is a
huge issue, but this is a bigger challenge. This is an
existential threat, I would say, to the United States, to world
order, to denuclearization of the world, to nuclear
proliferation. And, as far as I see it, there are a lot of
folks, and whether it is here at the hearing or if you watch
the media, they all say there is no military option. They say,
well, there is a military option, but not really; it is
unthinkable, so we will never use it.
And I look at it this way: In order to actually achieve our
objectives--and we have almost accepted defeat even prior to
actually going about these objectives, in some circles. We have
three areas. Number one is diplomacy, which we are ramping up
in a big way through economic use, through actual diplomacy,
everything else. Number two is missile defense, which we would
obviously need in the case that we have to defend ourselves.
Number three is a military option. People that understand
instruments of power and how they work and the various
instruments of power that our Nation has to understand that you
cannot do diplomacy with an adversary without a big stick to
use, whether that is military, whether that is economic,
whatever, that there has to be on the table basically the
unthinkable in order to make diplomacy work.
So, number one, diplomacy is good, but if we are ruling out
a credible military option, I think it is going to be
unsuccessful ultimately. The idea of missile defense is great,
and we need it. But the reality is, if we just back up and say,
well, as long as we build a missile defense, North Korea will
be allowed to have a nuclear weapon, I think that leads to
massive proliferation around the world. How do you tell Iran
that they can't have a nuclear weapon when the JCPOA is up,
actually fairly soon, when, in fact, you have just given North
Korea de facto access to a nuclear weapon?
And so let me just ask--I will ask a question, Mr.
Billingslea, to you. So when people go out and they say there
really is no military option, even though it is unthinkable--by
the way, the military should be used in doomsday scenarios, of
which I think this ranks up there with doomsday scenarios--does
that strengthen your diplomatic hand, does that strengthen your
ability to get North Korea to the table, or does it weaken it?
Mr. Billingslea. I think we would be exceedingly unwise to
take anything off the table. I was a Senate staffer up here on
the Foreign Relations Committee when the agreed framework was
negotiated. And that was designed to freeze the Yongbyon
reactor and so on. And we gave all kinds of heavy fuel oil
under the Clinton administration. And look where we are now.
So this administration has made very clear, at the Cabinet
level and the President himself, that we are not going to kick
this can down the road. We can't. He is testing advanced
nuclear designs and ICBMs. It is a matter of time now before he
mates the warhead to the missile and poses an existential
threat not just to our friends and allies but to us.
Mr. Kinzinger. Let me ask you a question to follow up. As a
prior administration official said--and I don't like to throw
stones at past administrations, so I am not doing that. But as
this person wrote in an op-ed, we have to just live with a
nuclear North Korea, in essence, for me, saying that the prior
administration was willing to live with a nuclear North Korea.
Let me ask you a question. If we say, as long as we have
missile defense, we are unwilling to do what is difficult for
North Korea, we are unwilling to engage in economic action
against the Chinese, push the Chinese back in their territorial
disputes in the South China Sea, whatever. If we do that, can
you talk about what the rest of the world will look like when
we de facto accept North Korea as a--even if we don't say we
have accepted them, if we de facto accept them, what does that
do when the JCPOA runs out of time, what does that do to South
Korea, Japan, other countries' nuclear ambitions, and what does
that do to our moral authority to enforce the nuclear
nonproliferation?
Mr. Billingslea. Well, I will defer to State Department on
sort of the broader implications, but I would tell you, we are
not willing to live with a nuclear North Korea. North Korea has
proven that they are certainly willing to share nuclear
technology with all manner of pariah regimes, to sell
capabilities. I think Ambassador Bolton just had an op-ed where
he pointed out it was a recent anniversary of the Israeli
strike on a Syrian nuclear facility which was alleged to have
been constructed with North Korean support, for instance. So
these are big issues. We are determined to induce the Chinese
to help solve this problem.
Mr. Kinzinger. Well, let me commend you on that. And, Ms.
Thornton, I would give you the time; I am out. So I am not
ignoring you. I just--the clock ran out. But let me say at the
end, to reiterate what the Secretary said, I couldn't imagine
in the situation that Syria is in today, which I think is
tragic--and I think there has been a lack of action on our part
to fix that--I couldn't imagine, had they had a nuclear
program, what we would be looking at today.
And there is a lot of concern of social instability in
North Korea. Look, people don't like to be oppressed. They
won't be oppressed, even in a place like North Korea. What
happens someday when that government is destabilized and you
see something? I think these are all important questions.
And, again, I want to commend you and the administration
and the State Department for their hard work on this issue. And
I yield back.
Chairman Royce. We will go to Congresswoman Norma Torres of
California.
Mrs. Torres. Thank you once again, Mr. Chairman, for
bringing us together for this very, very important and critical
issue that we have here in dealing with North Korea and all of
the problems that they have caused most recently.
I think we pretty much all agree that there is no magic
bullet in dealing with this regime. And I think that we pretty
much are in agreement that, so far, all the sanctions and
everything that we have done hasn't worked. So where have we
gone wrong? I don't know. Part of that we are trying to address
here. I think that we have to be pretty realistic that this
regime that we are dealing with is willing to do anything, put
its people and the entire world at risk in order to achieve
what they ultimately want to achieve, and that is a nuclear
weapon that would come far enough to reach American citizens.
And we have been talking a lot and calling out Los Angeles--I
represent L.A. County--San Francisco. We haven't really
mentioned Hawaii, which is a lot closer, and our territories.
Another issue that we have neglected to address, and that
is the consumer issue. We haven't really engaged consumers and
a more global inclusion to deal with North Korea and China's
appetite to have slave-type workers working in their companies.
So, as a consumer, when I am buying products, where is that
chain of where this product was made and who it was made by? We
know that many of our products are made in China, but not by
whom. Correct?
So, to me, the bigger issue is, are we hitting the right
targets? Are we being surgical enough to inflict the maximum
pain on the regime versus inflicting the maximum pain on the
people of North Korea?
Congresswoman Wagner and I have introduced the North Korea
Follow the Money Act, H.R. 3261, which would direct the
Director of National Intelligence to produce a national
intelligence estimate of the revenue sources of the North
Korean regime. My hope is that this bill will make our
sanctions policy more precise and a bit more effective.
But I think that we still cannot get away from engaging,
you know, more people. If foreign governments are not willing
to engage--everyone is interested in a doomsday clock. It was
advanced by another 30 seconds in January. And I think that we
missed another opportunity to talk about what is happening in
the Korean area more closely.
I would like to ask if you would agree that a clear picture
of North Korea revenues--if we need to have a better picture of
North Korea revenues in order for our sanction to be more
effective.
Mr. Billingslea. So, Congresswoman, you are always going to
find that I and the Treasury Department are interested in more
intelligence, not less. We are an intelligence-driven
organization, and the more precise information that can be
generated, the better.
I would say that one--back to your point about
opportunities missed. We are at the point now where enforcement
is crucial. We have the various U.N. Security Council
resolutions. In the past, it was sometimes very difficult to
judge the proper enforcement of these different provisions
because they weren't complete embargoes. You could get into
arcane arguments about how much----
Mrs. Torres. The best embargo that you can get is for the
consumer to be more informed and for the consumer to say, I
will no longer purchase any good that comes from this country--
--
Mr. Billingslea. One hundred percent.
Mrs. Torres [continuing]. Because they are failing to
support us in ensuring that we have a nuclear-safe world.
Mr. Billingslea. I agree 100 percent. And I would highlight
two particular areas. You talked about labor. One of the
successes that Ambassador Haley has had at the U.N. is getting
past this idea that while we would just cap North Korean labor
at whatever level it is, the slave labor in these various
countries, we are now--under the new resolution passed last
night, this is going to be wound down. That is important.
Seafood is the other area to really talk to consumers about
to make sure that we go after any efforts to smuggle North
Korean seafood into----
Mrs. Torres. Can you give me an estimate of what percentage
of North Korean revenues are from illicit sources?
Mr. Billingslea. At this stage, virtually all revenue is
now illicit and illegal because the U.N. Security Council has
banned just about every single----
Mrs. Torres. So what are our options in dealing with that?
Mr. Billingslea. Maritime enforcement. The single most
important thing we can do is enforce a complete prohibition on
the sale of North Korean raw materials.
Mrs. Torres. Thank you. My time has expired. I yield back.
Chairman Royce. We go now to Congressman Ted Poe of Texas.
Mr. Poe. Thank you, Mr. Chairman. Thank you all for being
here.
I think always when we make big decisions, we should look
at history. My understanding is that the Russians, Stalin, put
the Kim regime in power; first, to invade the South, in my
opinion, to prevent the West being aware of what is taking
place in Eastern Europe when the Soviet Union kept moving
through and taking that area.
We have had three Kims in charge. They have all been very
belligerent, they all have committed crimes, going all the way
back to the hijacking of the Pueblo, to the KAL Flight 858, the
attempted assassination of the South Korean President. They
have a history of doing bad things. But it has always been the
goal that they feel entitled because they are put there by
Stalin to be in charge of North Korea. And as the chairman
said, they want to concur the South. The war has never ended.
It is a cease fire or a truce or an agreement not to--there is
no treaty involved.
And we have been played by the Kims for years. They talk
about causing war, nuclear capability, and the West says, oh,
we will pay you not to do that if you promise to be nice. And
so they promise not to declare war on anybody, they take our
money, supposedly to feed their starving people, and then what
do they do a few years later? They do the same thing. And this
has been going on all the way back to the Clinton
administration.
They understand one thing, that the West, the United
States, can be bought off if they just make a lot of noise
about doing bad things to the rest of us. We should understand
that. We should understand that being nice and saying that we
will take care of you and encouraging them in a diplomatic way
to not declare war has not worked. And I'm not saying we ought
to go to war, I am just saying that is what they understand.
So this President has taken a different point of view. He
is talking in a language that I think little Kim can
understand, that those days are over. And I commend Ambassador
Nikki Haley for her work in getting these two latest rounds of
sanctions through the U.N. The idea that the Chinese and the
Russians are going to agree to sanctions on North Korea, I
think that is a stroke of genius. I don't know how she did
that. Especially the Russians, who started all of this with
Stalin back in 1950.
So I want to know what our options are, not just one. I
want to know where we are going. You know, we all want
sanctions. Well, sanctions, they hadn't really done much to
stop anything, but we want sanctions, and we want more
sanctions, and we want little Kim to stop this. But what if he
doesn't stop it? What is the U.S.'s plan? And surely the U.S.
has a contingency plan down the road. What is it?
You all are looking at each other. What is the contingency
plan? Sure, we want sanctions. We want to cripple the economy.
We want them to stop the slave trade. We want them to do all
those things. But what have you done, because little Kim, he
doesn't think like we do. So what are the rest of the options?
Ms. Thornton. So, thank you. Yes, Mr. Congressman, I think
we have a strategy. I mean, you all have heard from the
Secretary, from other secretaries----
Mr. Poe. What is it?
Ms. Thornton. It is the pressure strategy. We want to solve
this through negotiated settlement peacefully, but we are not
taking any options off the table----
Mr. Poe. Which are?
Ms. Thornton [continuing]. Understand----
Mr. Poe. I only have a minute, so you have to kind of cut
to the chase. What are the other options?
Ms. Thornton. Options to use force, options to use
sanctions, pressure to choke off the regime's revenues, et
cetera, to get them to come to the negotiating table. And I
think we have been very clear about the strategy. We are not
going to pay for negotiations, as has been done previously, as
you mentioned. In past history, when we have dealt with the
regime, they have sought payoffs. And we have made it very
clear, the President and the Secretary, that we are not going
to go down that road this time. We are going to band together
with the coalition of global partners to choke off all of their
economic revenue. And if we----
Mr. Poe. So we have a military option down the road, if
nothing works?
Ms. Thornton. Sure.
Mr. Poe. Would you agree with that, Assistant Secretary?
Ms. Thornton. Yes. Absolutely. And as I said, we are not
going to take any of those options off the table.
Mr. Billingslea. I would additionally offer, at a much more
very precise level, and you will see it in my full written
remarks, but we are targeting two things here. We are targeting
his access to hard currency, because he needs these dollars for
his WMD and missile programs. And we are targeting the way he
still has access to the international financial system. We need
to rip that out root and stem.
And that is what we are focused on, is shutting down his
access to hard currency through these new U.N. embargoes that
Ambassador Haley has successfully gotten in place. These are
total cutoffs. You cannot trade in North Korean coal. That is a
huge percentage of the revenue left to this dictator, given
that we actually have relatively well shut off his arms trade
and a number of the other things he was trading in. He has
basically been reduced to high-volume, low-margin commodities,
minerals, things like that, and we have to choke that off.
But, secondly, because of lack of enforcement in the
international system by countries, we have talked about China
today, Russia, he still has access to the international
financial system because he has North Korean brokers and agents
operating with impunity brazenly abroad in foreign
jurisdictions. That has to stop. And so that is our next step.
Mr. Poe. Thank you, Mr. Chairman, for the extra time.
Chairman Royce. Mr. Ted Lieu of California.
Mr. Lieu. Thank you, Mr. Chair. And, first of all, thank
you to the witnesses for your public service.
I served on active duty under U.S. Pacific Command in the
1990s at Guam, and we did a whole series of different
exercises, most of them were directed at North Korea, and it
was really clear there were no good military options. And the
reason I bring that up is because diplomatic economic options
depends on whether, in fact, you have a good military option,
and often it is not for us to say; it is dictated by the facts
on the ground. And if we do have amazingly great military
options, then we might do less diplomacy and less economic
sanctions. But if we really have no good options militarily,
then you might have to double down on what you are doing.
So I think it is important to just walk through some of
those not so very good military options. And let me start with
this question. The Trump administration's goal is to
denuclearize North Korea. That is correct, right? But we don't
know how many nuclear weapons they have. Isn't that correct?
Ms. Thornton. We have estimates.
Mr. Lieu. Say that again.
Ms. Thornton. We have estimates.
Mr. Lieu. You have estimates. And we also don't know where
all those nuclear weapons are, correct? They are pretty good at
hiding them.
Ms. Thornton. They are good at hiding things.
Mr. Lieu. Right. So in order to get rid of those weapons to
get the Trump administration's goal through military force, we
would need a ground invasion, find those weapons, and destroy
them. Isn't that correct?
Ms. Thornton. Sorry, I didn't get the connection.
Mr. Lieu. Right. Since we don't know where the nuclear
weapons are, we don't know how many they have. In order to
denuclearize North Korea through a military option, we would
need a ground invasion to find those weapons and destroy them.
Isn't that correct?
Mr. Billingslea. I suspect we would need our Department of
Defense colleagues here to really truly answer that.
Mr. Lieu. No, I understand. But for you to do your job, you
also need to understand the military option, right?
So let me just go on. North Korea also has the knowledge to
build nuclear weapons. Isn't that correct?
Ms. Thornton. Yes.
Mr. Lieu. And they have got the knowledge to build ICBMs.
And you can't unlearn that. So to keep them from doing this in
the future, we would need to occupy the country or have South
Korea or one of our allies occupy the country and keep them
from doing this again in the future. Isn't that correct? If we
were to do this through military force.
Mr. Billingslea. Well, I don't know that that is
necessarily--and, again, I am putting my old Pentagon treaty
negotiator hat on, but there are countries that have abandoned
their nuclear programs and their missile ambitions. South
Africa is a good example. Argentina is a good example. So there
are examples.
Mr. Lieu. After the use of military force? No. Right?
Mr. Billingslea. Actually----
Mr. Lieu. Through other means. I mean, I can understand
North Korea giving up or freezing the nuclear weapons, if we
apply economic or diplomatic pressure. But what I am saying is
if we were to use military force and they are going to resist
it, and then to keep them from doing nuclear weapons in the
future, we would need regime change to occupy the country. At
least that is my sense. I don't know how we otherwise would do
that. Let's just step away from nuclear weapons. They have also
got about 5,000 tons of chemical weapons. Isn't that correct?
Ms. Thornton. They do have chemical weapons, yes.
Mr. Lieu. Okay. And then they have this massive
conventional arsenal of rockets and artillery and so on,
correct? And they can launch all of that at South Korea. They
can use missiles against Japan. They can use missiles against
Guam, where we have got hundreds of thousands of Americans in
those three areas, correct? And we have millions of civilians
in all those areas, correct? So with any military option, we
wouldn't be able to contain escalation. Isn't that correct?
Ms. Thornton. It is all hypothetical, so I think it depends
on things that are happening and it depends on a lot of other
scenarios, but you are telling the story, so go ahead.
Mr. Lieu. Okay. So Defense Secretary Mattis has said,
basically, there are no good military options, and the options
would be very ugly, which then leads me to believe that your
job is very critical. We essentially have diplomacy and
economic sanctions. It seems like if we are going to proceed to
diplomacy, might it not be a good idea to have an ambassador to
South Korea that can help us?
Ms. Thornton. Yes.
Mr. Lieu. Okay. Where are we with that? Why hasn't the
President nominated an ambassador of South Korea?
Ms. Thornton. We are working on it. I know the Secretary
spoke to this the other day, I think. We are working on it.
Mr. Lieu. I am just saying it does send a message that we
are not pursuing diplomacy seriously, and we are also
disrespecting our critical ally, South Korea. And I urge the
Trump administration to get its act together and nominate an
ambassador to South Korea. With that, I yield back.
Chairman Royce. Thank you, Mr. Lieu. We go now to Mr. Lee
Zeldin of New York.
Mr. Zeldin. Well, Thank you, Mr. Chairman. And thank you to
both of our witnesses for being here.
I believe that the administration has done a great job over
the course of the first several months in office in making new
strides, in bringing China to the table, to bring Russia to the
table, to ramp up sanctions effort, to have more multilateral
diplomacy, to have increased economic pressure, to engage in
further information campaigns within North Korea that didn't
exist previously. And I think Ambassador Haley, especially,
deserves a whole lot of credit for her hard work at the United
Nations with the success that she has achieved there. And we
wish her nothing but the best.
Some of our colleagues have spoken about the idea of not
using a military option. I think we all should agree that the
military option should be the last possible option that we
would be using after everything else were to fail. But some of
my colleagues would go a little bit further, almost to suggest
taking the military option off of the table. And I think from
some of the other testimony here and your answers, there is
certainly an agreement amongst others who would disagree
believing that having the military option on the table is one
that helps with multilateral diplomacy and increased economic
pressure and all of the other efforts. So it would not be wise;
it would be unwise to take the military option off of the
table.
I wanted to ask you a little bit about what that red line
is and has the administration taken a public position on a red
line? Do you believe we should have one? What does it look
like? Because, for me, the red line should be that North Korea
should not have the ability to deliver a nuclear warhead to the
United States. And there is still a component of their
development that appears to not be there. The chairman got to
it a little bit earlier as he was engaging one of our
colleagues on the other side of the aisle as far as surviving
reentry.
So we are pursuing the diplomacy angle. We are pursuing the
economic angle and the information angle. Thinking of military
option as the last possible option. Preparing the whole slate
of conventional to unconventional military options. What is
that red line?
Ms. Thornton. Well, the assistant secretary and I are here
representing the economic sanctions lever and the diplomatic
levers in this. And I have said that we are determined to
pursue a peaceful resolution through a negotiated settlement.
Of course, we are not taking any options off the table. We
realize this is a very difficult problem, as has been outlined
by Congressman Lieu here.
I would say about red lines, we and the Secretary of State
are determined to use this pressure campaign to get the North
Korean regime to change its path and to come to the negotiating
table with a serious set of proposals on denuclearization. How
we verify that, complete verifiable, irreversible
denuclearization is what we are seeking through a negotiated
settlement.
I think we think we have a lot more room to go to squeeze
them and increase the pressure of the international community.
And I think we are continuing to see that that strategy is
working, that the North Koreans are feeling that pressure. And
we are focused on getting them back to the table.
So I think as far as red lines go for a military option, I
would certainly want to defer that question to some future
point where we are not as much engaged in the diplomatic and
economic pressure part of the campaign.
Mr. Zeldin. I personally believe that when the President
said that North Korea would be met with fire and fury, that if
North Korea were to attack the United States, they would be met
with fire and fury. I was not offended, by any means. And I
believe that Kim Jong-un needs to know. And as someone who is
homicidal and not suicidal, he needs to know that he would be
putting himself and his regime at great risk by attacking us.
There is a lot of hard work that has been done by the
administration doubling down, tripling down, and quadrupling
down, making a lot of progress, great progress specifically to
the United Nations. I would just say if we truly want to
prevent North Korea from having the ability to deliver a
nuclear warhead to the United States, they are getting so much
closer to it, that if we are actually serious about that
military option, that we are going to have to start seriously
having that discussion, because that may be imminent. I yield
back.
Chairman Royce. Mr. Mike McCaul, who also chairs the
Committee on Homeland Security.
Mr. McCaul. Thank you, Mr. Chairman. I appreciate that.
I view this as probably one of the biggest threats to the
homeland, if they are capable of delivering an ICBM with a
nuclear warhead to either Guam or the mainland of the United
States. I know, looking back historically, A.Q. Khan and his
network, this access between Pakistan, Iran, and North Korea.
Once Pakistan got it, we couldn't take it away. Iran, we had
our negotiations. And now, it looks like North Korea has it.
And I think once a country has this capability, it is very
difficult to take it away. So I don't envy your positions in
terms of trying to negotiate our way out of this. And I think
the last previous administrations have failed to get us to that
point, and now we are where we are. And I think Iran is
probably watching this whole thing play out in terms of what is
their next step going to be as well.
I am not going to get into military options. I know it is
not your expertise. I do think cyber should be looked at as
something that could be done to shut them down. And I know we
have tremendous capability in that regard. But my question is--
I know it has been talked a lot about Russia and China, are
they going to cooperate with these sanctions, and how much
leverage is China putting on North Korea. But my question
really has to go to the more illicit side of the house.
Kim Jong-un has this North Korean Office 39 that raises--
sells basically drugs, illegal exports of minerals, as you
mentioned, counterfeit cigarettes, a lot of other things. What
are we doing to try to counteract that? And, also, when it
comes to proliferation and the sale of arms, can you tell me,
how much do you estimate North Korea is making off
proliferation to countries like Iran and Syria?
Mr. Billingslea. Congressman, it is good to see you.
Mr. McCaul. Yeah, you too.
Mr. Billingslea. So one of the things that is very
important to underscore is that the Treasury Department and the
authorities we wield are not, as you know from your time with
the Department of Justice, they are not just sanctions.
Sanctions is one of many tools we have. What we use to, in
effect, collapse the Bank of Dandong was not a sanction; it was
a--section 311 under the PATRIOT Act, action to root out the
North Koreans in that bank.
In terms of the proliferation of weaponry, because of
previous U.N. Security Council resolutions, we have been able
to dry up much of the illicit sales that they were engaged in
to various African regimes and so on. There are still several
transactions that they periodically float that we are actively
engaging various countries to deter signing of contracts and
going down that road. It would be very unwise for them to take
these actions. We are in a full court press on this.
Because of the success that Ambassador Haley and State
Department have had at the U.N., in effect--you were asking
about sort of illicit transactions--in effect, nearly every
export coming out of North Korea today, as of last night,
nearly every export is now illicit. Textiles are now illicit.
You cannot trade in North Korean textiles. You cannot trade in
basic minerals anymore.
Under the previous administration, talking about bureau 39,
one of the things they would do is sell these huge overpriced
bronze statues, and then the weapons were the kicker on the
side as a little sweetener for paying six times the going rate
for a bronze statue. So that organization, the Mansudae Fine
Arts Studio was sanctioned. And under our administration, we
started rooting out the rest of that particular arts and
monuments revenue-generating schema.
North Korean labor is another category that they are
getting significant money from. And with the results last
night, there is now not a freeze or a cap on North Korean
laborers, there is a requirement to wind it down. I am not a
big fan of wind-downs, because it is real hard to verify that.
But that is, nevertheless, a big step forward, and we intend to
enforce that as well.
I have reiterated on multiple occasions with counterparts
in the Gulf and elsewhere that we need to see the North Koreans
gone. The Department of State has been very active on this
front, and we are seeing a drying up of revenue associated with
the slave labor that the North Korean's employ.
Mr. McCaul. And then to my last question, North Korea
proliferating weapons to Iran and Syria.
Ms. Thornton. So we do track any kind of illicit
proliferation networks from the North Koreans and go after
those transactions, again, with colleagues at Treasury and
other agencies in the U.S. Government. When we find them, we
try to block them or deter them. And we have had some success.
It is a continuing effort on our part, and we devote a lot of
attention to that in our Bureau of Nonproliferation.
Mr. McCaul. But it is happening?
Ms. Thornton. I think there are transactions that we are
worried about, yes.
Mr. McCaul. Okay. And I know some of that may be in another
setting than this. So thank you very much.
Chairman Royce. Well, I want to thank the witnesses for
their testimony. I thank you for answering the members'
questions here today. I am sure more of those questions will be
submitted for the record for you to answer. There are a few
issues that are urgent for us, but I don't think any of them
are more urgent than the North Korean threat at this time.
And to its credit, the administration recognized this early
on. Secretary Tillerson's first focus as Secretary of State was
North Korea. And he has been extensively engaged, working with
allies in the region, while pressuring China and Russia and
other countries that are funding the Kim regime. We need more
sanctions, tougher sanctions. We need to supercharge this right
now. And the administration is moving in the right direction.
And China, each day, is rethinking the cost of its financial
support for North Korea.
The administration's focus on Korean slave labor abroad is
very good. Sanctions are just one element of power we need to
bring to bear. We need to stop giving only lip service to the
power of information inside North Korea, broadcasting
information in to change attitudes and conditions in North
Korea. We simply aren't doing this well enough, and it must be
a priority.
And, again, thank you for your testimony. We look forward
to your follow-up, and this hearing stands adjourned.
[Whereupon, at 12:25 p.m., the committee was adjourned.]
A P P E N D I X
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